Is your CPA or Tax Preparer not including the QBI Deduction on your tax return? If yes, this could cost you money. If you have a qualified pass-through with your business entity, you may be able to deduct up to 20% of your Qualified Business Income (QBI) on your federal income tax return. Sole Proprietorships, LLCs, S-Corps, and Partnerships are all considered pass-through entities. Unfortunately, the QBI Deduction is not available for owners of C Corps.
In 2017, the Tax Cuts and Jobs Act, allowed non-corporate taxpayers to deduct up to 20% of their qualified business income, plus up to 20% of qualified real estate investment trust (REIT) dividends and qualified Public Traded Partnership (PTP) income.
To read up on this allowable IRS deduction visit here.
Qualified Business Income (QBI) Deduction
Per the IRS.gov:
“S Corporations and Partnerships are generally not taxable and cannot take the deduction themselves. However, all S corporations and partnerships report each shareholder’s or Partner’s share (or portion) of QBI items, W-2 wages, UBIA of qualified property, qualified REIT dividends and qualified PTP income, and whether or not a trade or business is a specified service trade or business (SSTB) on a statement attached to the Schedule K-1 so the shareholders or partners may determine their deduction.”
For 2022, the income threshold for claiming the full 20% is $170,050 for single filers or $340,100 for joint filers. If your business earns more than the allotted threshold, the deduction becomes 20% of your business income or 50% of total wages paid to employees – whichever is less.
Make sure to ask your CPA or Tax Preparer if they are including this deduction if you have qualified business income. You don’t want to lose out on money if you qualify.
Want some more tax tips?
Make sure to subscribe here.
Please Note: This information is provided as informational only and not tax advice.
