The Tax Cuts and Jobs Act: Qualifying for Business Deductions

        The Tax Cuts and Jobs Act is known for its lowering of certain tax rates. That fact is made clear in its name. However, some of these benefits are not as easy to take advantage of. That is why there is a provision called Section 199A. This has been added to allow as may businesses as possible to have a sizable deduction of “qualified business income”. What type of income is this? How do you know that the “reputation or skill” of your business will allow you to qualify? Recent IRS guidance has shed some light on this topic.

          The reputation and skill clause will only be used to describe a unique set of business circumstances. For example, if a business or taxpayer was receiving income from the use of a name, image, or appearance fee. This will apply to actors, singers, and others in the performing arts industry. This same guidance has stated that brokerage services, including real estate and insurance, will not be defined in this way.

          At this point, the proposed guidance from the IRS can change. But if it stays as is, there is a great amount of detail involved in the way taxes are dealt with moving ahead. Now is the time to speak with a Qualified Tax Professional to find out how the changes are affecting you. The sooner you start that conversation, the easier the transition will be.

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