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bill28
New Member

Should the calculation for QBI subtract from Schedule C net profit the adjustments on Schedule 1 such as self-employed business income and 1/2 SE before apply the 20%?

If Schedule C net profit is 5000.00 and the self employed health insurance listed on schedule 1 adjustments is 3000, is the 20% for the QBI deduction on 5000.00 or 2000 (5000-3000)?
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Accepted Solutions
dmertz
Level 15

Should the calculation for QBI subtract from Schedule C net profit the adjustments on Schedule 1 such as self-employed business income and 1/2 SE before apply the 20%?

Calculated based on the final regulations sections 1.199A-1 through 1.199A-6, issued several days ago, it would be 20% of $1,646 ($5,000 - $3,000 - $354).  This is how TurboTax does the calculation.  $354 is the deductible portion of SE taxes for someone who has not maxed out the Social Security wage base.

The above also assumes that your taxable income is under the limit where being a specified service trade or business might be an issue and that you have taxable income of more than $1,646.

View solution in original post

1 Reply
dmertz
Level 15

Should the calculation for QBI subtract from Schedule C net profit the adjustments on Schedule 1 such as self-employed business income and 1/2 SE before apply the 20%?

Calculated based on the final regulations sections 1.199A-1 through 1.199A-6, issued several days ago, it would be 20% of $1,646 ($5,000 - $3,000 - $354).  This is how TurboTax does the calculation.  $354 is the deductible portion of SE taxes for someone who has not maxed out the Social Security wage base.

The above also assumes that your taxable income is under the limit where being a specified service trade or business might be an issue and that you have taxable income of more than $1,646.

View solution in original post

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