EPISODE #016

THE IRS IS COMING AFTER CRACK AND PACK

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5 Ways Your Wealth Is Under Attack book

5 WAYS YOUR WEALTH IS UNDER ATTACK

If you want to stop the attack, you'll want to get your copy.

Crack and Pack

In this episode, John discusses recent IRS updates on “crack and pack.” The IRS has vowed to come after it!

John is the author of 5 Ways Your Wealth is Under Attack and It’s Your Wealth – Keep It.” He has lectured extensively on financial planning and is a recipient of the Five StarSM Wealth Manager Award.

Don’t miss John’s explanation of “crack & pack” and the TCJA deductions:

  • The 20% tax break for pass-through businesses has a ceiling for qualified business income (QBI).
  • Many small business owners have been looking for ways to get around this QBI limit. One way might be to break up their business into smaller entities:
  • Small businesses in service industries like healthcare, financial planning, insurance, etc., try to separate the admin part of their business from the service part.
  • This is for small business owners who are married filing jointly. If income is above $315k, they lose the 20% deduction for their pass-through service business.
  • The impact of the tax break is pretty big. If a business owner is making a salary of $200,000 and they’ve got $600,000 of qualified business income, 20% of that QBI number could be deductible. With $120,000 deductible, they pay tax on $480k rather than $600k (plus the salary).

This explains why people have been contemplating pulling their businesses apart! So what to do?

If you are new to Smallwood Wealth schedule a Wealth Curve Conversation here.

* This award should be subjectively bestowed, and the process of its receipt readily explained by objective data.
Investment Advisory Services provided by Smallwood Wealth Investment Management, LLC, an SEC registered investment advisor. Headquartered at 199 Broad Street, Red Bank NJ 07701-2056. Securities offered through Purshe Kaplan Sterling Investments, Member FINRA/SIPC Headquartered at 80 State Street, Albany, NY 12207. Purshe Kaplan Sterling Investments and Smallwood Wealth Investment Management, LLC are not affiliated companies.

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