The IRS is cracking down on this small business tax break. What it means for you

Personal Finance


Previously, tax professionals pondered whether enterprising employees could leave their jobs, start their own business, and be rehired by their old company as independent contractors.

This way, these new entrepreneurs could qualify for the 20 percent deduction.

The IRS also put the kibosh on that.

“If you worked for the employer and became an independent contractor for the same person, performing the same work, you’re presumed to retain your status as an employee,” said Michael D’Addio, a principal at Marcum.

As a result, you wouldn’t qualify for the break. The kicker? You’re still on the hook for all tax responsibilities related to running your own business.

“The self-employment tax, the need to file a separate tax return for the entity, depending on how you set it up? All of that still applies,” said Tim Steffen, CPA and director of advanced planning at Robert W. Baird & Co.

“You might’ve unnecessarily complicated your life without the upside of the exclusion,” he said.



Source link

Products You May Like

Articles You May Like

Over 46,000 IRS workers called back to work to process refunds, calls
Recession threat has retailers thinking twice about big decisions
The major bank earnings reports are all in and Morgan Stanley was the biggest loser
Netflix earnings Q4 2018
JP Morgan CEO Jamie Dimon gets raise to $31 million

Leave a Reply

Your email address will not be published. Required fields are marked *