Insight

Do you qualify for the QBI deduction?

Do you qualify for the QBI deduction? And can you do anything by year-end to help qualify? | quickbooks consultant in harford county md | Weyrich, Cronin & Sorra

If you own a business, you may wonder if you’re eligible to take the qualified business income (QBI) deduction. Sometimes this is referred to as the pass-through deduction or the Section 199A deduction.

The QBI deduction is:

  • Available to owners of sole proprietorships, single member limited liability companies (LLCs), partnerships, and S corporations, as well as trusts and estates.
  • Intended to reduce the tax rate on QBI to a rate that’s closer to the corporate tax rate.
  • Taken “below the line.” In other words, it reduces your taxable income but not your adjusted gross income.
  • Available regardless of whether you itemize deductions or take the standard deduction.

Taxpayers other than corporations may be entitled to a deduction of up to 20% of their QBI. For 2022, if taxable income exceeds $170,050 for single taxpayers, or $340,100 for a married couple filing jointly, the QBI deduction may be limited based on different scenarios. For 2023, these amounts are $182,100 and $364,200, respectively.

The situations in which the QBI deduction may be limited include whether the taxpayer is engaged in a service-type of trade or business (such as law, accounting, health or consulting), the amount of W-2 wages paid by the trade or business, and/or the unadjusted basis of qualified property (such as machinery and equipment) held by the trade or business. The limitations are phased in.

Get in touch with us to learn more.

© 2022

Related Insights

Federal court rejects FTC’s noncompete agreement ban-cpa in harford county md-Weyrich, Cronin & Sorra

Management Advisory Services & Business Consulting

Federal court rejects FTC’s noncompete agreement ban

In April 2024, the Federal Trade Commission (FTC) approved a final rule prohibiting most noncompete agreements with employees. The ban was scheduled…
If your business has co-owners, you probably need a buy-sell agreement - tax preparation in hunt valley md - weyrich, cronin and sorra

Management Advisory Services & Business Consulting

If your business has co-owners, you probably need a buy-sell agreement

Are you buying a business that will have one or more co-owners? Or do you already own one fitting that description? If so, consider installing…
Should you convert your business from a C to an S corporation - accounting firm in harford county md - weyrich, cronin and sorra

Management Advisory Services & Business Consulting

Should you convert your business from a C to an S corporation?

Choosing the right business entity has many implications, including the amount of your tax bill. The most common business structures are sole…

Connect with us

Use the form below to send us an email. WCS responds directly to all inquiries and general questions within 24 hours of posting.

This contact form is deactivated because you refused to accept Google reCaptcha service which is necessary to validate any messages sent by the form.