Thank you very much for the answer. But there are complicating factors in this scenario of his. He is not just a salaried physician, he is a teleradioloist who owns his own small home business as an pass through LLC/PLLC. His LLC is paid via 1099's, then his LLC pays him and his employee. It is a pass through entity in the health field. The LLC is taxed as an S corp.
Many physician practices are structured as pass-through entities, which may enable their owners to qualify for the 20% tax deduction for QBI – depending on income level. The key here is "pass through entity".
Pass-through entities include subchapter S corporations, partnerships and some limited liability companies, but the benefits are severely limited (but not eliminated) for “specified service trades and businesses” (SSTB), including physicians. Owners of qualifying pass-through entities will receive a 20% deduction on “qualified business income” (QBI), effectively reducing their maximum effective tax rate. But this deduction is limited for medical professionals who make over $160,700 for single filers ($163,300 in 2020) or $321,600 for those filing jointly ($326,600 for 2020). For those with more than $210,700 for individuals and $421,400 for joint filers, the deduction starts to phase out.
Healthcare professionals with incomes above these phase-out thresholds will not be eligible for the 20% pass-through income deduction. In some cases, higher-earning physicians may have seen a net increase in their 2018 taxes resulting from other changes in the income tax law. So he wants me to go with the QBI deduction, as his AGI on the joint return is less than $421,400. There will be phase out limitations of course, but even though he is a physician/radiologist/teleradiologist, his identification as a small business owner of a pass through LLC entity, even though a SSTB, legally allows the QBI deduction. This is his and other physician owned small business pass through LLC's thought process. I am preparing returns, and this seems to be correct. Calls to IRS have yielded both yes and no answers. The IRS help center is a useless entity. I welcome all opinions and comments please.
