Phase-out for New 20% Deduction
If your pass-through business is an in-favor business and it qualifies for tax reform’s new 20 percent tax deduction on qualified business income, you benefit at all times, including being above, below, or in the expanded wage and property phase-in range.
On the other hand, if your business is a specified service trade or business (doctors, lawyers, accountants, actors, athletes, traders, etc.), it is in the out-of-favor group and you benefit only when you are in or below the phaseout range. Once your taxable income exceeds the threshold amounts above, you arrive in one of the four possible categories below:
1. Phase-in range for a non-specified service trade or business
2. Phase-out range for a specified service trade or business
3. Above the phase-in range for an in-favor non-specified service trade or business
4. Above the phase-out range for an out-of-favor specified service trade or business
If your taxable income is going to be above the threshold amounts that trigger the phase-in or phaseout issues, contact us so we can spend some time on your tax planning.
Last Minute 2020 Biz Deductions
The purpose of this post is to get the IRS to owe you money.
Of course, the IRS is not likely to cut you a check for this money (although in the right circumstances, that will happen), but you’ll realize the cash when you pay less in taxes.
Here are seven powerful business tax deduction strategies that you can easily understand and implement before the end of 2020.
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Form 1040
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Want to know more? Have some tax questions of your own? Get in touch with us and we’ll guide you thru the tax and accounting process.