usmbguest5318
Gold Member
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- #41
You might want to do a little more research:Just heard that the tax rate on pass-through income will be 20%!
I don't know if most folks know what that means. I know what it means for me and my partners. It means that we and other tens of thousands of professionals like us and working in "high dollar" firms -- doctors, consultants, accountants, attorneys, engineers, architects, etc. -- even though we earn very handsome incomes, we'll pay federal income tax on our incomes at rates lower than will people who earn less or more and are paid as employees.
I wouldn't have much to say about the drop in the tax rate, but for the fact that the drop amounts, for many such folks, to a 19.6% tax cut! If you think your doctor(s) are well-off now, make no mistake, they are about to see a huge bump in their after-tax income. To see what I mean, check out what the taxable income range is for folks in the current 15% and 25% brackets. Now consider that people such as those I've described above and who quite often earn or earn more than $420K/year will be paying in comparison to folks who fall into the 15% to 25% bracket range.
Pass Through Taxes
On top of that, the bill makes it very difficult for lawyers, engineers, doctors, consultants and other personal services providers, who make up a good share of small businesses, to qualify for the 25% rate.
As Congress readies tax overhaul, an accountant explains its impact on Connecticut taxpayers
As far as “pass-though” businesses, the final bill settled on a 20 percent deduction for these small businesses. What is a “pass through” and who might be helped in Connecticut by this new tax break?
I think this new tax break will help a lot of companies in Connecticut, because there are a lot of family-run companies in Connecticut that are either an S-corporation, or a partnership or a sole proprietorship, and all those entities would be considered pass- throughs. So, essentially, they would be getting a 20 percent deduction to help reduce what they pay on their net income.
What kinds of businesses would not be able to take advantage of this new tax break?
Looks like companies that would not get that would be service companies. So that would be your law firms, your accounting firms, your consulting firms.
So that’s going to cut out a lot of people, right? So the mom-and-pop shop will get it, but not the partnership of doctors down the street…?
That’s right, because those are service companies.
As with so much about the tax code, the exceptions to the rules (aka "loopholes") are every bit as important as are the rules themselves.
- See the linked content in my OP and in post #8 here: CDZ - State and local tax limitation on tax deductibility
Xelor: " What does that mean? It means that if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. "
Me: This is unsubstantiated and I believe untrue. Nowhere on the web does it say that the final tax bill has that provision. Seriously, are we to believe that NONE of the numerous detractors of this piece of legislation saw this? You can bet what you like that they would be screaming their outrage to the rooftops if this were true? Xelor's statement is true for the current existing tax code, but the new tax law limits the SALT deduction to a maximum of $10,000. I have yet to see any loopholes or exceptions to that.Me: This is unsubstantiated and I believe untrue.
I cannot do anything about what you do or don't believe. I can only provide links to credible references and leave the remainder to you. I provided the links; the burden is thus on readers and would-be commentators to read the content at the linked webpages.
Xelor: " What does that mean? It means that if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. "
About what "this" do ask? Assuming you want a summarization of what you'll discover after reading the content to which I provided links, it's this: provided they qualify for the exception(s), individuals who have an ownership stake in pass-through entities can take more than $10K in SALT deductions.
You have NEVER provided any link, credible or not that says that " if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. " in any way shape or form. For the simple reason that it does not exist and never did. You are totally inventing something out of nothing with no supporting evidence whatsoever and I will waste no more time on you.
And i leave to everybody else: can anyone find anything anywhere that supports Xelor's assertion that anyone who have an ownership stake in pass-through entities can take more than $10K in SALT deductions? Clearly he can't. So show me the link please and we can end this nonsense.
You have NEVER provided any link, credible or not that says that " if one earns one's income via an S-corp, partnership or sole proprietorship, one can deduct the entirety of SALT paid. " in any way shape or form.
You just keep thinking that....