So super impatient nerd who couldn't wait for someone in the media to actually explain these details. Preface: this my amatuer read. Looking for Kitces to chime in. If you scroll through the bill this is part 2 with key stuff on this exception to exception on page 35.
So the service industries are excluded except if your TAXABLE income is less than $315k (half if single) and phases out over next $100k ($50k if single).
TAXABLE is the key word. This is not your net profit from schedule c. It specifies that this deduction does not help you reach this deduction income limit which doublely confirms to me that all other deductions do! Charitable giving, 401k, HSA, mortgage interest, self employment tax deduction definitely drop me personally below this limit. I suspect most IC physicians could/do drop their taxable income at least $100k from their gross income.
I also see no language that makes sole proprietorships are excluded from this exception.
The 20% deduction is also applied to taxable income, not net profits (as long as that is less than your net profits which should be the case unless you have other bigger sources of income other than your business). In a sense any of my deductions (especially optional ones like charity) effect is reduced by 20% once I reach the $315k number.
So the service industries are excluded except if your TAXABLE income is less than $315k (half if single) and phases out over next $100k ($50k if single).
TAXABLE is the key word. This is not your net profit from schedule c. It specifies that this deduction does not help you reach this deduction income limit which doublely confirms to me that all other deductions do! Charitable giving, 401k, HSA, mortgage interest, self employment tax deduction definitely drop me personally below this limit. I suspect most IC physicians could/do drop their taxable income at least $100k from their gross income.
I also see no language that makes sole proprietorships are excluded from this exception.
The 20% deduction is also applied to taxable income, not net profits (as long as that is less than your net profits which should be the case unless you have other bigger sources of income other than your business). In a sense any of my deductions (especially optional ones like charity) effect is reduced by 20% once I reach the $315k number.
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