President Donald Trump speaks with reporters after signing the tax bill and continuing resolution to fund the government in the Oval Office of the White House in Washington in December of 2017. NEW YORK — Millions of small-business owners will be in uncharted waters this tax season as they try to determine if they qualify for a deduction that could exempt one-fifth of their income from taxes. Five months after the IRS issued guidelines to help business owners and tax advisers understand how the complex deduction works, accountants and tax attorneys still have questions. Even those who have attended seminars and workshops about the new law have left scratching their heads, especially about a section that bars service providers like doctors, lawyers and consultants from claiming the deduction. Some of these company owners have businesses that don’t easily fit into the IRS guidelines or proposed regulations the agency has also issued. “There’s a lot of conflicting advice out there,” said Jeffrey Berdahl, an accountant with RLB Certified Public Accountants in Allentown, Pennsylvania. “It’s going to be like the Wild West.” THE BASICS The deduction is aimed at giving tax breaks to sole proprietors, partners and owners of S corporations; these businesses are known as pass-throughs because company income “passes through” to owners’ 1040 forms, where it is reported to the IRS. Before the law was enacted, many of these owners couldn’t get the more favorable tax treatment enjoyed by traditional corporations, those known as C corporations. The new law allows… [Read full story]
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