Author: James R. Hamill
Effective for the 2018 tax year Section 199A allows a 20% deduction for “qualified business income.” This deduction applies to any business income earned outside a C corporation, so it will affect schedule C filers, and income earned in a partnership or an S corporation.
The mechanics of the deduction are not that difficult, but the deduction either phases out or may be limited if taxable income exceeds a threshold amount. For service businesses the deduction can be lost when income reaches the end of the phase-out range. For non-service businesses the deduction may be limited based on the W-2 wages paid from the business or a combination of W-2 wages and unadjusted basis of property used in the business.
It may not be clear whether a business is a service business. It may also be possible to plan to maximize the deduction when the taxpayer is otherwise in the phase-out range. This course will discuss those issues, and many others, to allow you to properly advise clients. Join Jim Hamill, CPA, Ph.D., for a look at how this deduction works and how to answer your clients' questions about this money-saving opportunity for Schedule C filers and those in certain LLCs, S corps and partnerships.
This course reflects tax law after enactment of TCJA.
Publication Date: February 2018
Designed ForCPAs, EAs, tax preparers and other tax professionals with responsibility for advising clients with business income on their tax returns.
NASBA Field of Study
Taxes (2 hours)
Program PrerequisitesBasic understanding of federal income taxation for individuals and pass-through entities.