Posted by (American Life InsuranceGuidance News) On January 2019, 1, the Trump administration finally finalized a new commercial tax reduction plan.The new plan brings benefits to practitioners in the American insurance industry: the "Pass-Through" structureInsurance agency or brokerage company, Its owners and shareholders may receive tax relief of up to 20%.
90% of US companies have a "Pass-Through" structure, which includes S-Corp, LLC and Partnerships.
The new tax cuts and employment bill continues to cut taxes for some service industries
As early as August 2018, it was reported from the insurance industry that the IRS was considering this nearly 8% "Pass-through Deduction". This tax reduction and exemption will benefit targetedSelling life insurance, disability insurance, property and accident insuranceInsurance broker, Rather than a financial consultant defined as a "wealth planning consultant" or "retirement planning consultant".
The IRS had already proposed this possibility in the draft regulations of the new "Tax Reduction and Employment Law" section at that time, namely the "Qualified Business Income" (QBI) relief clause.
Tax cut bill benefits insurance services industry
Bob Rothbart, CEO of Big I (United States of Independent Insurance Brokers and Agents), said, "...The Internal Revenue Service has issued final regulations to implement new provisions in the tax law to reduce or exempt taxes under the'pass-throug' structure. Including insurance broker companies and insurance agents."
Under the new regulations, the "Pass-Through" structureInsurance agencyOragency, The QBI (Qualified Business Income) of its owners and shareholders may receive tax relief of up to 20%. The IRS believes that insurance brokers and agents are not involved in "specified service trade and business", therefore, regardless of their taxable income level, they can enjoy this relief.
This tax reduction plan ultimately benefits allIndependent insurance brokerAnd brokerage agencies.
In a report in the Wall Street Journal the day before yesterday, a tax reduction request from the real-estate settlement agent industry was rejected by the Ministry of Finance.
(American Life Insurance GuideNet report)
