When lawmakers recently passed the “Tax Cuts & Jobs Act of 2017,” they created a new tax deduction. It’s found in new tax code Section 199A, also known as the “Qualified Business Income Deduction.” Will it be good for you? Sure. If you’re not earning a lot. But if you’re a high earner, and operate a “specified service trade or business, “ your 20% deduction (under … [Read more...]
Tax Reform Eliminates Tax Benefits of Business Vehicle Trade-Ins
Remember the good old days (a few weeks ago in 2017)? That was when you could use tax code Section 1031 to avoid paying taxes when you traded in a business vehicle for a replacement vehicle. (In 2017 it was the same story for an exchange of other personal property like equipment, collectibles and more.) Well, tax reform is here and it has killed the Section 1031 … [Read more...]
Tax Reform Terminates Business Entertainment Deductions
Alert! The recently passed “business-friendly” tax reform package just completely killed the 50% business deduction for “directly related and associated entertainment.” That’s right. Last year you could take a prospect or client to a business dinner following the theater or a ballgame and write off 50% of the cost of the dinner and the theater or ballgame. (You just had to … [Read more...]
Do You Need to Switch to an S Corporation Now to Realize the New 20% Deduction?
Because of tax reform, I’ve got three important questions for you: Do you currently file your taxes as… A Schedule C taxpayer because you receive 1099s? A Single-member LLC? A proprietorship? If you do fall into one of these categories, you can qualify for a new tax deduction equal to 20% of your qualified business income under new tax code Section 199A but only … [Read more...]
Will Section 199A Phase In or Phase Out Your 20 Percent Deduction?
Are you running a “pass-through” business like a proprietorship, S corporation, or partnership? Is it an “in-favor” business? If you’re answering “yes,” you qualify for tax reform’s new 20% deduction on qualified business income. (This is true whether you’re above, below, or in the expanded wage and property phase-in range.) BUT… if your business is an IRS-defined … [Read more...]