Small business owners are getting a big tax break starting in 2018. Here is what you need to know and how to make sure you are taking advantage of the new law. This article is intended for small business owners who make under $157,500 or married and make under $315,000. If you are over this income, we need to talk, the rules get very complex.
For the most part, most deductions that were in place in the past are still in place for 2018. The biggest change for small business owners is the introduction of something known as a Section 199A deduction.
If you are single and make under $157,500 or married and make under $315,000, Section 199A is easy to calculate. Basically, we figure out your business income and then take an extra 20% deduction. That is it. Rental properties, sole proprietors, S-Corps, partnerships, and others get to take this deduction which ultimately means lower taxes for the owners.
If you are a small business owner, being taxed as an S-Corporation is even more desirable then before. The self-employment tax savings are still in place plus the new Section 199A deduction reduces taxes even further.
The new laws have made it even more complex for business owners to navigate the tax code maze. JRG Taxes can analyze your situation and optimize your results.
JR Gramstad CPA