Some of you may have set up Partnerships or S-Corporations to help reduce tax burdens or for liability protection purposes or for another reason. The new tax code offers a potentially HUGE tax advantage to these types of entities (as well as self-employed people) and may be the single largest tax opportunity to come out of the Tax Cuts and Jobs Act.
The new law allows a deduction of up to 20% of "qualified business income" passing through to the individual taxpayer. There are some phase-outs and income limitations as well as restrictions on the type of trade or business that may utilize this deduction, but I expect a large increase in the number of people who may elect to take an entrepreneurial route such as becoming a 1099 contractors, as opposed to being treated as an employee.
The new stipulations will apply to sole proprietors, sole-member LLCs, multi-member LLCs, S-Corporations, and many other entity types that are not C-Corporations as defined by the IRS.
We are on top of this new tax law here at LCI Taxes and are ready to help you and your family prepare for these changes as well as any others that may be forthcoming. Give us a call at 386-586-3976 with questions or to schedule your appointment!
Chris Kocher CPA