- The Tax Cuts and Jobs Act, which went into effect last year (2018), included a new 20% small business tax deduction for owners.
- Taxpayer qualifed for the deducation if their taxable income was $157,500 (if single) or $315,000 (if married and filing jointly).
- So far, more than 14 million taxpayers claimed this deduction on their 2018 returns (through May 23, 2019).
Note | Whe it comes to tax and financial decisions, always consult your personal, trusted tax advisor as each taxpayer has unique circumstances.
Some accountants decided to proceed with caution on the small business tax deduction this spring, as the IRS proposed new guidelines for the rules were not issued until January, according to CNBC. Those updated guidelines included proposed guidance on the tax break for rental real estate owners — a safe harbor they can follow to be sure they qualify for the 20% deduction.
Some taxpayers that fall under a “specified service trade or business,” including doctors, lawyers and accountants, can’t take the deduction at all if their taxable income exceeds $207,500 if single or $415,000 if married.