One of the provisions in the Tax Cuts and Jobs Act, enacted at the end of 2017, is new Sec. 199A, the deduction for Qualified Business Income (QBI). This allows a deduction for up to 20% of QBI from partnerships, limited liability companies (LLC), S corporations, trusts, estates, and sole proprietorships.
Specified Service Trade or Business is defined as:
A specified Service Traded or Business (SSTB) is not able to take advantage of QBI in the same way a taxpayer whose business income is NOT an SSTB can.
The basic Section 199A Qualified Business Income pass-through deduction is 20% of net qualified business income, which is huge. How much you actually get to take is limited by several factors. Listed below are some of the major items:
*Those are just the basics, the rules are actually very complex.
You can claim deductions for the business-related use of an auto using either the standard mileage rate method or the actual expense method. You should use the method that will yield the largest deduction.
IRS requires you to maintain business mileage logs in order to take deductions.
Hiring Your Children
If you have your own business, consider hiring your child to work after school or on vacations. The wages you pay your child for bona fide work are tax deductible.
Home Office Expenses
To qualify for a deduction related to an office in the home, you must have an area of your home used exclusively as your principal place of business. This includes a place of business where you meet or deal with patients, clients, or customers.
If you have done any improvements other than minor repairs to the properties or assets please bring invoices for those expenses, and invoices for purchases of any assets.
Unlike other plans, a profit-sharing plan is flexible. It can be designed so that the employer is not required to make an annual contribution.
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