REVIEW OF BUSINESS PASS THRU DEDUCTION
June 3, 2019 - Douglas Myser
Review of business pass thru deduction. We encounter many self employed individuals who are not taking advantage of one of the biggest tax breaks in the Tax Cuts and Jobs Act, passed recently. That is the 20 percent pass thru deduction for LLC's. We advise anyone who is thinking of doing this, to make sure they follow the rules, and if they don't know the rules, get professional help. Review of business pass thru deduction.
Business owners and their accountants can rest a bit easier as the Internal Revenue Service has provided the long anticipated final word on how they can claim one the biggest tax perks in the tax overhaul. The regulations detailing the 20% deduction for pass through business owners are of crucial importance to the operators of such entities, who can range from mom and pop convenience store owners to private equity investors. The guidance can cut those business owners tax bills by as much as one fifth. The rules would govern what many say is one of the most complex changes in the tax law President Trump championed. The IRS made a series of changes to make is simpler for businesses to determine whether they can get the tax break, a senior Treasury official said.
Veterinarians, for example, don't qualify for the deduction, but rental real estate owners who spend at least 250 hours a year involved with the business can get the deduction, according to the IRS guidance. The rules make clear that income originating and selling mortgages is eligible for the deduction. Taxpayers had been worried that because of the partial shutdown of the federal government they wouldn't see final rules before the Jan. 28 start of the tax filing season, and that confusing parts of the original provision could leave them exposed to penalties plus interest on improperly reported income.
The IRS also released a proposal clarifying that shareholders of mutual funds with real estate investment trust investments can get the deduction. If you made mistakes on your tax returns, and ended up owing taxes, you can always call a Tax Resolution Company for Tax Relief options.