The recently enacted Tax Cuts and Jobs Act includes a tax cut that should be very beneficial for owners of “pass through” entities such as S Corporations, partnerships, LLCs taxed as partnerships, and sole proprietorships. Starting in the 2018 tax year, business owners who qualify may be able to exempt up to 20% of their business income from their personal tax return.
This is, essentially, tax-free money. But getting it is not automatic.
Not all pass through entities will qualify, and there are limitations and phase outs that apply. The determination of whether or not a business qualifies and the amount of income exemption allowed is a complex process.
We can help. We strongly recommend any owner of a pass through entity schedule a meeting with a member of our Tax Department to get the answers to three questions:
- Does your business qualify for the tax exemption?
- What changes can you make to your return to maximize the tax-free income?
- What effect will the new exemption have on other parts of your tax return and business?
The sooner you get these answers, the better prepared you will be to take full advantage of the opportunity presented by this significant tax change. Contact our Tax Department at (781) 407-0300 to discuss how this new tax provision may apply to you and your business.