S Corporation a Partnership?

11/27/2019

It’s common to consider making your S corporation a partner in your partnership: since it can save you self-employment taxes.

Does this affect your Section 199A deduction? It does.

Certain payments are not qualified business income (QBI) for the Section 199A deduction. The non-QBI payment rule applies whether the partner receives the payment as an individual or as pass-through income from an S corporation.

Keep the S corporation self-employment tax savings in mind when considering your partnership activity. It is possible that the self-employment tax savings can make the S-corporation-as-a-partner strategy well worth it. We have to look at your total tax and financial situation and align them with your goals to find out if this strategy will work for you.

You have an option if you want your Section 199A deduction (psssst it's an extra 20% deduction). We will be happy to explore that option with you. Take a look at our blog on Tax Strategies or book with us now.

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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.

Keana founded this website and decided and created this blog page to offer a space for those seeking knowledge to understand, however not to be confused with advice or planning strategies.

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