What is considered a specified service business?

A specified service business is a trade or business to which any of the following applies [IRC Sec. It involves the performance of services in the fields of health, law, accounting, actuarial sciences, performing arts, consulting, athletics, financial services, or brokerage services.

What is not a specified service trade or business?

Examples of Specified Service or Trade Businesses Now excluded from being an SSTB are health clubs and similar facilities, medical research and testing services, and the manufacturing and sales of pharmaceuticals and medical devices.

Is my business an Sstb?

The full description from the IRS reads: Any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners [is considered an SSTB]. This translates to any trade or business that primarily earns its income from: Product or service endorsements.

What is a service trade business?

It includes “any trade or business where the principal asset is the reputation or skill of one or more of its employees or owners.” The agency goes on to specify those providing services in health, law, performing arts, accounting, actuarial science, and consulting, among many others, as operating an SSTB.

What business qualifies Qbi?

Individuals, trusts, and estates with qualified business income (QBI) from a partnership, S corporation, or sole proprietorship may qualify for the QBI deduction. Any income you receive from a C corporation isn’t eligible for the deduction.

Are Realtors Sstb?

This means real estate and real estate management companies are not considered service trades or businesses (SSTBs) and qualify for the Section 199A deduction. Individuals who own real estate investments don’t necessarily qualify as owning a trade or business unless they actually run the investments like a business.

Does an Sstb qualify for Qbi?

QBI deductions based on income begin to be phased out when an SSTB owner’s taxable income (calculated before any QBI deduction) exceeds $157,500, or $315,000 for a married joint-filer. Therefore, no QBI deduction can be claimed for income from any SSTB.

Is a financial advising firm considered a specified service trade or business?

Financial Advisors Are Eligible for a QBI Deduction, But… Because financial services is one of a group of businesses that is considered a “Specified Service Business” under the QBI rules, which means the QBI deduction is phased out at higher income levels.

Do independent contractors qualify for Qbi deduction?

Freelancers and independent contractors will usually qualify to take the QBI deduction.

Do limited partners get Qbi deduction?

The QBI deduction applies to qualified income from sole proprietorships, partnerships, limited liability companies (LLCs) that are treated as sole proprietorships or as partnerships for tax purposes, and S corporations.

Is an Sstb a qualified trade or business?

A qualified trade or business is any section 162 trade or business, with three exceptions: A trade or business conducted by a C corporation. For taxpayers with taxable income that exceeds the threshold amount, specified services trades or business (SSTBs).

How is Qbi calculated Sstb?

In the case of a non-SSTB, when taxable income exceeds the threshold amount, the QBI deduction is calculated by taking the lesser of:

1. 20\% of QBI; or.
2. The greater of: 50\% of the W-2 wages; or. The sum of 25\% of the W-2 wages plus 2.5\% of the UBIA of all qualified property.