Why did the amount of the QBI used on the QBI component worksheet change from the total income recorded on Schedule C-EZ?

[dmertz · Accepted solution]

The developers changed the calculation per the recently finalized regulation §1.199A-3(b)(1)(vi) to calculate QBI by subtracting the deductible portion of self-employment taxes and the self-employed health-insurance deduction.  It seems that the employer portion of any self-employed retirement contribution should also be subtracted, but it seems that TurboTax is not yet doing this.  TurboTax is doing this calculation in the QBI worksheet at the bottom on TurboTax's Schedule C form.

[JulieCo]

There are different components that will be used to determine the QBI deduction, depending upon which is lower.  Plus the deduction phases out depending upon the taxpayer's income levels.

Here is more detail:

How is the QBI deduction calculated?

That will depend on the business owner’s total taxable income, which includes non-business income (such as wages, interest, capital gains) as well as business income.

Under $157,500 ($315,000 if filing jointly): The calculation is straightforward — 20% is applied to QBI or taxable income minus capital gains and dividends (whichever is less) to come up with the deduction.

This information is included, along with some examples, in the following FAQ about the 20% Qualified Business Income Deduction:

https://ttlc.intuit.com/replies/7019998