Tax cuts and job act s corporation 20%
In short, if the business would not run if it were not for your skill or expertise, the business is an SSTB. Do all pass-through businesses qualify for the deduction? YES, any trade or business qualifies UNLESS One: The pass-through is a “Specified service trade or business” or SSTB.Īn SSTB is one that involves performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading and dealing in certain assets or any trade or business where the principal asset is the reputation or skill of one or more of its employees. Only pass through entities are eligible for the Section 199A deduction. Pass through entities are typically sole proprietorships, partnerships, LLC’s, trusts and S corporations. The owners’ tax rates apply to this pass through income. What is a pass through business? A pass through is a business where taxes are not levied at the entity level but rather at the owner level where the income and expenses have been passed through.Let us get some basics out of the way first: There is a LOT more information to be culled from the 184 pages. The Internal Revenue Service dropped the proposed Regs on Section 199A on August 8th, 2018, all of its 184 pages can be accessed here.Ĭaveat: Today’s post is a small introduction to this new section. This section allows owners of flow through entities such as Sole Proprietorships, S Corporations or Partnerships a deduction of 20% of the income earned by the flow-through. The biggest change that came out with the Tax Cuts and Jobs Act of 2017: Section 199A.