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Section 199A Deduction Decision Tree

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Last updated: 24 Nov, 2018
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By Jason Watson ()
Posted November 23, 2018

Remember that taxable income is all income for the household.

Specified Service Trade or Business (as defined above)-

  • If taxable income is less than $157,500 (single) / $315,000 (married) then the 20% deduction for your pass-through entity is fully available.

  • If taxable income is greater than $157,500 / $315,000 but less than $207,500 / $415,000 then a partial deduction is available. The phase-in of the limit is linear.

  • If taxable income is greater than $207,500 / $415,000 then you are hosed. Sorry. Hosed is a technical term accountants often use to illustrate an untenable situation.

All Others-

  • If taxable income is less than $157,500 / $315,000 then the 20% deduction is fully available.

  • If taxable income is greater than $157,500 / $315,000 but less than $207,500 / $415,000 then a partial deduction is available with the W-2 and depreciable asset limit calculations phase in.

  • If taxable income is greater than $207,500 / $415,000 then the 20% deduction is compared to the full W-2 and depreciable asset limit calculations (see Betty in an earlier chapter).

As mentioned earlier, we will show you examples and side-by-side comparisons in the next chapter. We have Fred, Barney, Hot Shot Surgeon, Goat Herder, and all kinds of nonsense.

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