Large Capital Gain can Ruin Your Section 199A Deduction

October 5th, 2018 at 7:40 AM

05 Oct Large Capital Gain can Ruin Your Section 199A Deduction

Posted at 11:40h Business Deductions by MF

 

I 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.

 

Mark S. Fineberg, CPA

 

 

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