Qualified Business Income Deduction (QBID)
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Maximize your tax savings with the Qualified Business Income Deduction (QBID), which allows eligible taxpayers to deduct up to 20% of their qualified business income from certain trades or businesses. This guide explains the criteria for the deduction, including limitations based on taxable income, the nature of the business, and W-2 wages. Learn about the specific rules for real estate enterprises, specified service trades or businesses (SSTBs), and the implications of exceeding income thresholds.
Highlights:
• Eligibility and Income Thresholds: Deduction available for income from partnerships, S corporations, LLCs, and sole proprietorships, with phase-out thresholds starting at $191,950 for single filers and $383,900 for joint filers.
• Specified Service Trade or Business (SSTB): Excludes certain professions like health, law, and financial services if income exceeds threshold amounts.
• W-2 Wages and Property Limitation: Deduction may be limited based on the amount of W-2 wages paid and the unadjusted basis of qualified property.
• Real Estate Enterprises: Specific rules for rental real estate, including requirements for significant rental activity or real estate professional status.
• Exclusions from QBI: Includes investment income, wages, guaranteed payments, and foreign income.
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