IRS will issue Qualified Business Income Deduction (QBID) regulations by the end of July

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An IRS senior administration official stated that IRS will issue Qualified Business Income Deduction (QBID) regulations by the end of July according to Bloomberg. These regulations will help outline the specific requirements and limitations for claiming the QBID deduction.

On December 22, 2017 the President signed into law the Tax Cuts and Jobs Act of 2017 (TCJA). The 503 page TCJA is the largest tax overhaul since the 1986 Tax Reform Act, and it will affect almost every individual and business in the United States.

Possibly the most important change is that the TCJA created a new 20 percent deduction for qualified business income (QBID) from sole proprietorships, S corporations, partnerships, and limited liability companies taxed as partnerships. This deduction is available to both itemizers and nonitemizers. This new 20% qualified business income deduction is subject to some complicated restrictions and limitations. However, these complicated restrictions and limitations do not apply to individuals with taxable income at or below $315,000 for joint filers.

You may increase your QBID up to 20% by planning how much of your compensation from your pass-through entities is channeled. Please contact your tax advisor to discuss how to maximize your 2018 qualified business income deduction (QBID).

Please note that the effective date is for tax years commenced after Dec. 31, 2017, therefore your 2018 tax year is affected and now it’s a great time for tax planning.

For more info please visit: https://finance.yahoo.com/news/pass-tax-guidance-delayed-until-145013981.html

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Published by Carlos Nazario