Are You Maximizing Your 20% QBI Deduction?

The Qualified Business Income (QBI) deduction, introduced under the Tax Cuts and Jobs Act (TCJA) of 2017, allows eligible business owners to deduct up to 20% of their qualified business income—a major tax-saving opportunity that many small business owners are either underutilizing or unaware of.

Whether you’re a sole proprietor, partnership, S-Corp, or LLC owner, this deduction could significantly lower your taxable income and increase your bottom line. But the question is—are you taking full advantage of it?

?? Who Qualifies for the QBI Deduction?

You may be eligible for the deduction if you operate as a:

? Sole proprietor ? S-Corporation owner ? Partnership or LLC member ? Real estate investor with qualifying rental income ? Freelancer or independent contractor

However, there are limitations and phase-outs based on income levels and the type of business you operate—especially for Specified Service Trades or Businesses (SSTBs) such as consultants, accountants, doctors, and attorneys. If your taxable income exceeds certain thresholds, the deduction may be reduced or eliminated.

?? Common Mistakes Business Owners Make with QBI:

1. Incorrect Income Reporting: Failing to properly classify income that qualifies for the deduction.
2. Missed Deductions: Not optimizing business expenses to stay within the income thresholds.
3. Business Structure Issues: Operating under the wrong entity type that limits QBI eligibility.
4. Failure to Plan for the Future: With QBI set to sunset at the end of 2025, now is the time to maximize its benefits while you still can.

?? How to Maximize Your QBI Deduction:

1. Review Your Taxable Income: Staying below the income limits can help you take full advantage of the deduction.
2. Optimize Your Payroll Structure: If you're an S-Corp owner, ensuring a reasonable salary distribution can help maximize QBI benefits.
3. Leverage Retirement Contributions: Contributions to retirement plans can lower your taxable income and help you qualify for the deduction.
4. Consider Business Restructuring: Sometimes, adjusting your business structure can improve your QBI eligibility and overall tax efficiency.
5. Engage a Tax Professional: QBI rules can be complex, and expert guidance can help ensure you don’t miss out on savings.

?? Act Now Before QBI Sunsets!

The QBI deduction is set to expire in 2025, meaning now is the perfect time to maximize this valuable tax benefit before it’s gone. Don’t leave money on the table—ensure you're making the most of it while you still can.

?? Need help optimizing your tax strategy? Let’s connect and discuss how you can make more and keep more!

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