We have good news for real estate and insurance brokers! The Internal Revenue Service released proposed rules that clarify the new federal tax law, stating that certain real estate and insurance professionals are eligible for the 20 percent pass-through deduction.
When the Tax Cuts and Jobs Act was signed in December, there was confusion surrounding which business owners are included in Section 199A, which permits owners of sole proprietorships, S-corporations and partnerships to deduct up to 20% of their income earned by the business.
The IRS clarified the confusion by stating that “real estate agents and brokers, or insurance agents and brokers” are included in the provision.
The requirements included in the deductions are extensive. Those who make under $157,500 a year, or $315,000 if filing as a married couple, can automatically qualify for the deduction. However, brokers exceeding that limit must calculate their eligibility based off of their W-2 wages. However, while these clarifications to the provision have been made, the rules and regulations are complex.
If you have any questions regarding this tax deduction or your eligibility, contact your DDK Tax Advisor.
