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posted Mar 11, 2022 6:39:24 PM

SSTB Deduction

I'm a self-employed contractor and my work involves the auditing of smaller banks (for commercial lending portfolio regulatory compliance review).  Does any one know if this qualifies for SSTB?  This is the first time I've heard of this and it seems my work content would qualify.   

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1 Replies
Expert Alumni
Mar 11, 2022 7:28:53 PM

SSTB is not a deduction. It stands for specified service trades or businesses

QBI stands for Qualified Business Income Deduction. (Also known as 199A)

Being a SSTB COULD limit the QBI deduction. 

That deduction lets 20% of business income be tax-free. It is listed on your 1040 line 13.

TurboTax asks the questions needed to make the determination if needed. 

 

According to the IRS:

  1. "For taxpayers with taxable income that exceeds the threshold amount, specified service trades or businesses (SSTBs). An SSTB is a trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading or dealing in certain assets, or any trade or business where the principal asset is the reputation or skill of one or more of its employees or owners. The principal asset of a trade or business is the reputation or skill of its employees or owners if the trade or business consists of the receipt of income from endorsing products or services, the use of an individual's image, likeness, voice, or other symbols associated with the individual's identity, or appearances at events or on radio, television, or other media formats.

The SSTB exception does not apply for taxpayers with taxable income at or below the threshold amount and is phased in for taxpayers with taxable income within the phase-in range. For taxpayers with taxable income above the phase-in range, no deduction is permitted with respect to any SSTB."

 

IRS LINK