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What Business Owners Should Know About the Tax Cut and Jobs Act (TCJA)

At Heemer, Klein & Company PLLC, we provide reliable and professional accounting services to residents in Sterling Heights, Warren, Richmond, and Southeast Michigan. In addition to the best in tax preparation and bookkeeping services, our accountants at Heemer, Klein & Company, PLLC offer the latest tax information for individual filers and business owners. Many business owners now benefit from the Qualified Business Income Deduction, which was put in place when the Tax Cuts and Jobs Act (TCJA) was signed into law in 2017. 

Qualified Business Income Deduction (QBID)

Because of the TCJA, business owners can now benefit from Section 199A Qualified Business Income Deduction (QBID).  This allows sole proprietors as well as partnerships, S corporations, and some trusts and estates (pass-through entities) the opportunity to deduct up to 20 percent of their qualified business income.  This deduction is not available for C-corporations or for those providing services as an employee.

As with all new tax laws, there are rules and regulations to know and follow.  The QBID has 2 components:

  1. Qualified Business Income – this component allows for a deduction of 20% of qualified business income for sole proprietors or through a partnership, S-corporation, trust, or estate.  This component is subject to limitations based on an individual’s taxable income that entails the type of business being conducted, the amount of W-2 wages paid by the qualified business, and the unadjusted basis of qualified property held by the business.
  2. Real Estate Investment Trust (REIT)/Publicly Traded Partnership (PTP) – This component allows for a 20% deduction of qualified REIT dividends and qualified PTP income.

For a complete list of Facts and Questions regarding this deduction as well as the rules and regulations governing its applicability, please visit the IRS website at the following link:  https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-provision-11011-section-199a-qualified-business-income-deduction-faqs

Contact Heemer, Klein & Company, PLLC for the Very Best in Accounting Services and Tax Preparation

Please feel free to contact us at: (586) 751-6060 in Warren, (586) 727-5145 in Richmond, or (586) 751-1040 in Sterling Heights with any questions you may have on this topic. Or, reach out to us through the contact form on our website.