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Do I Qualify for the QBI Deduction?
Dear <<First Name>>,
There is a lot of confusion surrounding the new Section 199A Qualified Business Income Deduction. Let’s try to shed light on this new rule.
What is QBI?
The qualified business income (QBI) deduction provides a significant opportunity for business owners to cut their federal income tax bill. QBI was designed to lower the effective tax rate on owners of pass-through entities, the write-off can be as much as 20% of QBI. The deduction is based on the amount of your qualified business income. This is essentially your profits from a pass-through trade or business. However, QBI does not include certain items that you do factor into your net income for determining what you pay income tax on. Consider this:
- A qualified business is any business except those “specified service businesses” and the income earned an employee, from guaranteed payments or personal interest, dividends or capital gains.
- The specified service businesses include: health, law, accounting, consulting, brokerage services, financial services, and others, but exclude architects and engineers.
- It is available to sole proprietors and owners of pass-through entities such as S-Corps, LLCs, and partnerships.
- It is subject to limitation based on the taxpayer’s income and the type of business.
Find out more how to get the full benefit of QBI!
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