1/ Admin is now issuing new withholding tables. But a lot more guidance needed so Americans know how much taxes to pay. How the new 20% deduction is generating uncertainty and perverse incentives for millions of American workers. medium.com/whatever-sourc…
2/ The questions: Under $315K in tax. income for a couple, do you get the ded. so long as you don’t work as an employee, instead as indep contractor or partner? Above threshold, do you get it if you meet other restrictions—and, again, make sure not to work as an employee?
3/ @lilybatch and I began to explore problems in an op-ed. This builds out some of the legal analysis. latimes.com/opinion/op-ed/…
4/ The law isn’t clear whether there’s this significant penalty on employment—allowing people working as sole props and partners to easily take ded. Has to do with meaning of one restriction that says can’t take deduction for “reasonable compensation” paid for services.
5/ Restriction might apply only to owners of S-corporations (narrow class). Might apply more broadly to everyone else, in which indep contractors and partners don't get windfall relative to employees. In short: ????
6/ This affects millions of people now. It’s about their tax liabilities for the current year. And…no ready answer.
7/ IRS should try to clean up mess and issue guidance ASAP. My view: apply “reasonable comp” standard as broadly as possible to treat service providers similarly whether employees, indep contractors, partners, or S-corp owners. Less than ideal but better than nothing.
8/ Then Congress: Repeal this whole mess of a deduction. Shouldn't have been there to begin with.
