Does your business qualify for the lower tax rate on pass-through business income?
One of the hottest topics in tax and business planning involves the question of whether certain businesses (like those that rely on the skill and reputation of owners and employees, for example) qualify for the new pass-through tax rate reduction.
Republicans promised a simpler and user-friendly tax code. While the new law simplified some tax provisions for individuals such as replacing most itemized deductions with a larger standard deduction, it made the law murkier for one of the most valuable tax benefits for small businesses — the special tax rate for businesses organized as pass-through entities. Pass-through entities cover over 90% of businesses in the U.S. and consist of S corporations, partnerships, LLCs, and sole proprietorships.
As is the case with most complicated tax provisions, navigating the new pass-through tax rate will likely increase compliance costs and add to taxpayer frustrations. However, complexity, especially in the tax code, presents opportunities to maximize benefits with careful planning. The pass-through tax provision will reward those who plan carefully and think creatively.
Boston Private hosted a webinar on March 29, 2018 where Washington policy expert Doug Fisher, tax attorney Amy Sheridan, and Boston Private specialist Brian Lopez discuss the new tax regulations and emerging developments for how to interpret and apply the pass-through tax rate.
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