MRPR Blog

Tax practitioners and industry leaders alike have been offering comments and posing questions to the IRS after the proposed regulations were released for the new Section 199A Qualified Business Income deduction. The IRS has worked diligently to analyze and clarify the new law, and issued final regulations on January 18, 2019.

The Tax Cuts and Jobs Act of 2017 (TCJA) is the largest overhaul of the United States tax code in a generation. There has been much reporting about the change in the tax rates, the new benefits available for business taxpayers, and the advantages and disadvantages of many of the changes to existing law. One of the more under-reported benefits, however, arises from something that is new with the TCJA – the concept of Qualified Opportunity Funds (QOFs). To the educated taxpayer, QOFs can mean potential tax savings and the chance to invest in the future of some of America’s most needy areas.

We’ve written before about the Section 199A deduction of the Tax Cuts and Jobs Act (TCJA). The new law allows individuals and trusts to take a deduction of up to 20% of qualified business income, or QBI, from a domestic qualified trade or business.

However, there is a limitation placed on the deduction if your taxable income is over a certain threshold - $157,500 for a single filer, $315,000 for married filers – relating to qualified business income that is earned from a “specified service trade or business” (SSTB).

If you're confused already, here's what you need to know to understand how Section 199A impacts your taxable income.

The 2017 Tax Cuts and Jobs Act (TCJA) is one of the most consequential changes to U.S. tax law in decades. It features changes to individual rates, sweeping reforms to corporate taxation, and much more. One of the most important provisions of the new law is the new Section 199A deduction for Qualified Business Income (QBI). Any taxpayer receiving income from a domestic “trade or business” can potentially take a tax deduction for up to 20% of that income. Eligible taxpayers will be able to take the deduction for the first time on their 2018 personal income tax returns - Form 1040.

As the 2018 calendar year end approaches, taxpayers should be aware of the new meals and entertainment rules for tax deductibility.