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The New IRC §199A: Qualified Business Income (QBI) Deduction

by Chelsea Rosine | Dec 20, 2018

What to Expect and Who the Section 199A Revisions Affect


Qualified Business Income DeductionOne of the biggest changes in the Tax Cuts and Jobs Act for 2018 is the new Qualified Business Income (QBI) Deduction. While this can be one of the more confusing deductions, it will affect many taxpayers and should be understood in order to help and inform clients.

Qualified Business Income

A Qualified Business Income (QBI) is defined by the IRS as “the net amount of qualified items of income, gain, deduction, and loss from any qualified trade or business.” This does exclude items such as capital gains, losses, certain dividends, and interest income. The income must be connected to a U.S. trade or business.

QBI Deduction Basics

The provisions to the QBI Deduction in Section 199A gives a tax benefit for many noncorporate businesses. The biggest change in the Tax Cuts and Jobs Act is the 20% QBI Deduction some business owners could be qualified for then they file their taxes in 2019. In general, it means a business owner with $100,000 in QBI could deduct up to $20,000. The intended result is for pass-through entities to receive treatment more on par with that of C corporations.

Who the Changes Affect

The qualified business income deduction isn’t only limited to pass-though corporations. The deductions are available to any taxpayers as long as they are either sole proprietorships filing Schedule C, non-corporate farms filing Schedule F, or have income from LLCs, S corporations, trusts and estates. It will affect all levels of business including corporations, small businesses, and contract workers.

While this is just a quick overview of the Qualified Business Income Deduction, there are many intricacies and details outlined in Section 199A that will need to be applied in the 2019 tax filing season. WebCE’s new course, The New IRC §199A: Qualified Business Income (QBI) Deduction, will teach you the ins and outs of the new IRC §199A along with its applicable terms and acronyms. You will walk away with a deep understanding of the QBID as well as rules regarding the SSTB category.

To order the course, The New IRC §199A: Qualified Business Income (QBI)Deduction and more, visit the WebCE course catalog or call 877-488-9308 to speak to a member of our support services team.

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