The propitious puzzle for small business owners: Understanding the Section 199A deduction

This paper will analyze how the new tax law changes passed by Congress that are effective beginning in the 2018 taxable year, specifically the Section 199A deduction, will impact small businesses. Research will be based on a survey of small business owners and tax professionals in the Cedar Valley area about their knowledge and opinion of the tax law changes. In order to make comparisons between the different businesses, questions will be geared towards how the businesses are planning to calculate the Section 199A deduction and what businesses are planning to do with the extra savings they may have after considering the deduction. From these results, the overall effect of the new Section 199A deduction for small businesses will be shown along with how businesses are planning for the deduction and how tax professionals can help them plan for it. Any common confusions found among small business owners will signal to legislators and tax professionals where clarity still needs to be provided in order to maximize the tax benefit from Section 199A for their clients. When more guidance is provided, tax professionals will be able to better assist their small business clients. Small business owners and entrepreneurs could also profit as they become more aware of new information about potential tax savings