The new 20 percent tax break for small businesses sounds like a good deal, yet accountants and tax prep software providers are grappling with last-minute changes to this provision. What it means for you.
As if this tax season weren't hectic enough, some accountants said they've run into software problems as they guide entrepreneurs through a new and complex 20 percent tax break.
This tax break allows owners of"pass-through" entities, including sole proprietorships, S-corporations and partnerships, to deduct up to 20 percent of their qualified business income. The sudden flurry of updates to the deduction even threw tax software providers for a loop, requiring them to tweak their programs just before tax season kicked off.
If you're an entrepreneur who isn't considered a"specified service trade or business," the rules are a little different. Other new regulations proposed this year also spelled out the conditions under which a business owner can aggregate multiple trades and businesses in order to get the tax break. One update required the software company to add a statement that must be filed for rental property owners who are using the new safe harbor to qualify for the 20 percent deduction, said Phillips of H&R Block.
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