The W-2 rule would not apply, however, if the filer's taxable income is under $500,000 if married, $250,000 if single."
That's correct. I actually missed that in my first nine readings of the Sec 199A stuff today. Sorry. BTW not joking about the nine readings...
This thread's subject matter now becomes much less urgent... it's urgent only for people with really high incomes (over $250K single and over $500K married).
To clarify, it's now your understanding that any sole proprietor would qualify, even without an S-Corp? And the "specified business trade" exemption is below $250k for a single filer?
If so, this is a huge giveaway. There will be a lot of tax games to fit in under the $250k/500k limit.
Yes, that's how I read the bill. Keep in mind, though, that taxable income plugs into the deduction calculation a handful of places...
FIRST, the deduction percentage gets applied to lesser of your qualified business income (so the pass through income) or your taxable income adjusted for your net capital gains...
SECOND, if your taxable income exceeds those $250K/$500K limits, you lose some or even all of your deduction if you're in a "specified service trade or business"... basically that means that white collar profession service businesses and then performing artists and athletes may miss out.
THIRD, if your taxable income exceeds those $250K/$500K limits, your deduction can't be more than 50% of your W-2 wages... meaning a taxpayer with a sole proprietorship or an employee-less partnership may miss out too if the proprietors or partner's taxable income is high.
I provided examples at the aforementioned blog post...