How Much Owner Salary Should S Corp Pay To Maximize Qualified Income Deduction?
Take somebody who has about 70% of the math ability of an engineer or actuary, 80% of the verbal reading comprehension ability of a lawyer, 60% of the leadership ability of an Army officer and maybe 70% of the charisma of a top producing life insurance salesman and you have the makings of a pretty good CPA. An above-average share of humility is required, which is why some of those other professions might not do so well as CPAs.
Types Of Work That Will Not Qualify For 20% Deduction – Some Devilish Details
TCJA has been hawked as simplifying. There is some truth to that as more people will be able to file 1040-EZ, but that is about it. Section 199A is a massive complication. Simplification would be saying all income is income to which either progressive or flat rates are applied. Having different flavors of income and some ambiguity or a gray area about where particular transactions fall is a fantastic source of complexity. Before the bill we had income that is not recognized at all, capital gains (either subject to NII or not), ordinary income (which might be subject to NII or SE or neither). Now we will have Qualified Business Income that can be subject to NII or SE or neither. That is not making it simple.
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.