The new Tax Cuts and Jobs Act brings a 20% deduction computed on qualified business income (QBI) for pass-through entities and Schedule C businesses. This qualified business income deduction is reduced by long-term capital gain and is limited if tentative taxable income (calculated before this deduction) exceeds $315,000 for joint filers.
If tentative taxable income is greater than the threshold, the QBI amount is limited to the amount of wage expense in the business, and is not available to a business based on the skill of one of its employees including law, accounting, consulting and financial services. After computing the QBI amount for each business a new entity may enhance the amount of 20% QBI deduction and many clients may need to alter their estimated tax payments for 2018.
Comments powered by CComment