We have had a number of clients who have been confused about the starting point for the new Section 199A tax deduction.
Let me clarify: taxable income is the sole starting point for your Section 199A deduction.
When your taxable income is equal to or less than the threshold of $157,500 (single) or $315,000 (married, filing jointly), your 199A deduction is the lesser of:
You are in the wage and/or wage and property phase-in range when your taxable income is above the threshold of $157,500 (single) or $315,000 (married, filing jointly) but equal to or below $207,500 (single) or $415,000 (married, filing jointly).
If your taxable income is higher than $207,500 (single) or $415,000 (married, filing jointly), pay attention to the following:
Note how taxable income creates the trigger point in every case described above. For Section 199A, taxable income is just that—taxable income. It’s adjusted for nothing.
If you would like help examining how these rules apply to you, please use the following link to book your complimentary strategy call with your team at Luster Tax Consulting.
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