“The amount of money paid as wage income to an S corporation owner or a guaranteed payment to partner through a partnership does not qualify for this 20 percent tax break. In the cases where the small-business owner qualifies, being a sole proprietorship or single-member LLC would result in a much larger tax break,” Vento said.
Specified service trades or businesses (SSTBs) generally don’t qualify for the deduction, but this still doesn’t exclude all businesses from potential benefits. “The SSTB exclusion only applies if the taxpayer’s taxable income is in excess of $315,000 of married filing jointly or $157,500 for other filing statuses,” DeFilippi said. “If taxable income remains below these thresholds, any taxpayer with QBI is eligible for the deduction.”