Tax Law and News IRS Issues Proposed Regulations on New 20 Percent Deduction for Pass-Through Businesses Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Intuit Accountants Team Modified Jun 18, 2019 1 min read The Internal Revenue Service issued proposed regulations on Aug. 8, 2018, for a new provision allowing many owners of sole proprietorships, partnerships, trusts and S corporations to deduct 20 percent of their qualified business income. The new deduction — referred to as the Sec. 199A deduction or the deduction for qualified business income — was created by the Tax Cuts and Jobs Act. The deduction is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file next year. The deduction is generally available to eligible taxpayers whose 2018 taxable incomes fall below $315,000 for joint returns and $157,500 for other taxpayers. It’s generally equal to the lesser of 20 percent of their qualified business income plus 20 percent of their qualified real estate investment trust dividends and qualified publicly traded partnership income or 20 percent of taxable income minus net capital gains. Deductions for taxpayers above the $157,500/$315,000 taxable income thresholds may be limited. Those limitations are fully described in the proposed regulations. Qualified business income includes domestic income from a trade or business. Employee wages, capital gain, interest and dividend income are excluded. In addition, Notice 2018-64, also issued today, provides methods for calculating Form W-2 wages for purposes of the limitations on this deduction. More information in the form of FAQs on Sec. 199A can be found on IRS.gov. Taxpayers may rely on the rules in these proposed regulations until final regulations are published in the Federal Register. Written or electronic comments and requests for a public hearing on this proposed regulation must be received within 45 days of publication in the Federal Register. Editor’s note: Find more from ProConnect about the Tax Cuts and Jobs Act on our Tax Reform Resource Center. Previous Post Action Required! Make Sure Your IRS EFIN Application is Current Next Post Practice Before the IRS and The Office of Professional Responsibility Written by Intuit Accountants Team The Intuit® Accountants team provides ProConnect™ Tax, Lacerte® Tax, ProSeries® Tax, and add-on software and services to enable workflow for its customers. Visit us at https://proconnect.intuit.com, or follow us on Twitter @IntuitAccts. More from Intuit Accountants Team Comments are closed. Browse Related Articles Tax Law and News IRS Issues Final Sec. 199A Regulations Tax Law and News Guidance Issued on Deductions for Cooperatives and Thei… Tax Law and News 10 Sec. 199A Deduction Details Every Tax Accountant Sho… Tax Law and News The Treasury and IRS Issue Additional Guidance on Quali… Tax Law and News New Tax Law Changes Affecting 2016 Returns Tax Law and News IRS Issues Tips on How Tax Reform Affects Farmers and R… Tax Law and News A Key Provision of the Tax Reform Act: New 20% Deductio… Tax Law and News Qualified Business Income Deduction Hot Topics Tax Law and News Expanded tax benefits help individuals and businesses g… Tax Law and News New and Improved: Intuit’s QBI Entity Selection C…