Front Page|Our Services|Our Team|Client Center|Financial News|Events|Contact Us

Financial Briefs

More Articles  Printer Friendly Version

 

The Big New Tax Break For Pre-Retired Professionals

Pre-retired dentists, doctors and lawyers as well as other independent professionals may be able save tens of thousands of dollars in income taxes annually during their peak income years under the new federal tax regulations. The new rules are complex. Here are 10 things pre-retired business owners need to know about qualifying for a 20% reduction in qualified business income under Section 199(A) of the new Internal Revenue Code:

1. Sole proprietors, LLCs, S corps, partnerships and other pass-through entities qualify.

2. Real estate and rental business income — including self-rentals — may qualify.

3. Some businesses are specified as ineligible and you may need a professional to determine if you qualify.

4. Service-business owners could get a deduction on 20% of their income, subject to income limitations.

5. A business owner with $315,000 in taxable income owes tax on only $252,000 — saving more than $12,000 of income tax.

6. If you are married filing jointly and have more than $315,000 of income, the 20% deduction is subject to a phase-out. The phase-out begins at $157,500 for single filers.

7. If you have more than $415,000 of income from the service business, the 20% deduction is eliminated ($207,500 for single filers).

8. To keep your income below these thresholds, consider contributions to a defined benefit (DB) plan.

9. DB plans require you to commit to funding a defined benefit plan instead of a defined contribution plan, making them more complex.

10. A DB plan can supercharge retirement savings while minimizing your taxable income to enable you to qualify for the 20% deduction for business owners.


Email this article to a friend


Index
Time Itemized Deductions To Reduce Taxes
The Truth About U.S. GDP Growth
Sidestepping New Limits On Charitable Donations
Another Member Of Music Royalty Dies With No Will
Paying Off A Mortgage And The New Tax Code
Key Facts On Deducting Medical Expenses
Reduce Your Widow's Tax Bill Materially Annually
Ten Things About 10-Year U.S. Stock Market Performance
Your Alma Mater Or Your Family?
Qualifying For The New Business Owner Tax Break
This Is Not Your Parents' Interest Rate Cycle
Life Is Fragile, So, Please, Value Each Day As Priceless
If Family Is Wealth, Then Planning Is Immortality
Everything You've Learned About Interest Rates May Be Wrong
This First Year Under The New Law Requires Planning

This article was written by a professional financial journalist for Vantage Point Financial Services, LLC and is not intended as legal or investment advice.

©2018 Advisor Products Inc. All Rights Reserved.
© 2018 Vantage Point Financial Services, LLC | 329 Regency Ridge Drive, , Centerville, OH 45459 | All rights reserved
P: 937-432-1111 | F: 937-432-1110 markblack@vantagepointadvisor.com |
Contact Us

Privacy Policy

Securities offered through First Allied Securities, Inc., A Registered Broker/Dealer, Member: FINRA/SIPC.  Advisory services are offered through First Allied Advisory Services, Inc., A Registered Investment Adviser.

This site is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security which may be referenced herein.  We suggest that you consult with your financial or tax advisor with regard to your individual situation.  This site has been published in the United States for resident of the United States.  Persons mentioned in this site may only transact business in states in which they have been properly registered or are exempt from registration.