Agency owners will be able to claim more money
under new tax rules approved Friday.
By Staff Reports January 18, 2019
The Trump
Administration finalized an IRS regulation making clear that owners and shareholders
of insurance agencies and brokerages organized as pass-through entities can
fully benefit from a new tax deduction.
The move pleased
the Independent Insurance Agents & Brokers of America.
“Today the IRS
released a final regulation implementing a new section of the tax code to
create a deduction for owners and shareholders of certain pass-through
businesses, including insurance agencies and brokerages,” said Bob Rusbuldt,
Big “I” president & CEO.
“This regulation is
a major and hard-fought win for Big ‘I’ members—the vast majority of which are
organized as pass-through entities. Prior to the regulation being finalized
there was uncertainty surrounding the application of the deduction to insurance
businesses.”
Under the
regulation, owners and shareholders of insurance agencies and brokerages can
take up to a 20 percent tax deduction on qualified business income, no matter
their taxable income levels, because the IRS does not consider insurance agents
and brokers to be engaged in a “specified service trade or business.”
Owners and
shareholders of “specified service trades and businesses” cannot take advantage
of the deduction if their taxable income is over a certain level.
“Big ‘I’ members,
whether organized as a pass-through entity or a C-corporation, can now rest
assured that the tax reform law is working for them and their employees,” said
Charles Symington, Big “I” senior vice president of external, industry &
government affairs. “We thank Congress for its previous work on this landmark
tax law and the Administration for working to finalize this regulation as
quickly as possible.”
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