-- In a recent interview, Thomas J. McAlister, founder of Thomas J. McAlister, PC in Denver, CO, explained the advantages to business owners about the 20% pass-through deduction and warned against missing filing deadlines.
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Introduced as part of the new tax code, the qualified business income deduction allows for owners of pass-through companies such as sole proprietorships, partnerships, and S corporations to deduct as much as 20% of their income.
When asked to comment, McAlister said, “The qualified business income deduction made headlines earlier this year and can help many small business owners maximize their tax savings. But there are a couple of things to be aware of before claiming this deduction."
Not everyone is able to deduct the full 20% under the new tax code.
“The new law clearly states that owners of pass-through entities can deduct as much as 20% of their income. In general, the more money a business owner makes, the less that he or she can claim under the qualified business income deduction,” McAlister said.
He added that if a business owner makes $207,500 or more in annual income, then they can deduct only half of W2 wages or 20% of wages plus 2% of specified capital assets.
“Because every small business owner’s tax situation varies, the best thing to do is to contact an experienced accountant who can tell you exactly how much you’ll be able to save under the new deduction,” he said.
However, McAlister also warns, not every small business owner qualifies for the pass-through deduction.
When asked to elaborate, McAlister commented, “Small business owners that have a lot of cash inflow and do not pay W2 wages are not eligible for the new deduction.”
Advice given to alter a company's structure to take advantage of the deduction might not work for you.
“Since the new tax code has gone into effect, accountants and financial advisors around the country have encouraged small businesses to convert into S corporations to qualify for the pass-through deduction,” he said.
“This change in structure means that business owners need to pay core staff by submitting W2 wages. Strict IRS requirements for filing W2s mean that any inaccuracies or delays can lead to hefty fines or even jeopardize an owner’s eligibility to qualify for the deduction,” McAlister commented.
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Contact Info:
Name: Thomas Mcalister
Email: Send Email
Organization: Thomas J Mcalister P.C.
Address: 4704 N Harlan St #675, Denver, CO 80212, USA
Phone: 303-279-1450
Website: http://thomasjmcalister.com
Source URL: http://RecommendedExperts.biz
Release ID: 388707
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