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In a recent interview, accountant Keith Huggett, founder of Next Level Accounting & Tax in Roseville, CA, explained how the new 20% pass through deduction could be an opportunity for some business owners.For more information please visit http://nlati.com
When asked to comment, Huggett said, “The pass-through deduction introduced as part of the new tax code made headlines, and business owners wanted to know how to create a tax strategy to take advantage of it.”
For example, since the new tax code came into effect, according to Huggett, accountants have advised some business owners who don’t qualify to convert into S corporations.
When asked to elaborate, he commented, “This change in business structure requires that enterprises file W2 forms to pay their owners or the few employees they have if they want to claim the qualified business income deduction."
Interestingly the qualified business income deduction allows for partnerships, sole proprietorships, and other pass-through entities to deduct as much as 20% of their income.
“If you’re looking to take advantage of the qualified business income deduction, business owners should first see if they qualify,” according to Huggett.
“The pass-through deduction does not mean you can automatically deduct 20% of your income – there are some caveats. The general rule of thumb is that the higher the income from a business, the less the deduction,” he said.
“For instance, if your income as a single taxpayer is more than $207,500, then the deduction will vary based on a number factors and in some cases may even amount to nothing,” he said.
Huggett added that business owners who earn a high income but don’t pay W2 wages are also not eligible for the deduction.
“Small business owners should work with an experienced accountant to create a plan that maximizes the deduction based on their individual circumstances,” Huggett added.
Source: http://RecommendedExperts.biz
Contact Info:
Name: Keith Hugget
Email: Send Email
Organization: Next Level Accounting
Address: 983 Reserve Dr, Roseville, CA 95678, USA
Phone: 916-960-9800
Website: http://nlati.com
Source URL: http://RecommendedExperts.biz
Release ID: 361646