Yes, I know all of that. I also stated that the numbers were for 2021, not 2022. My original question stands. The deduction should be QBI Income x 20% x Phase in %.
The Qualified Business Income Component Worksheet for 2022 calculates it this way:
QBI Income - (QBI Income x Phase Out %) = QBI Income (line 14) (This amt represents the QBI Income applicable to the 20% deduction after the phase out.
Then that number is correctly multiplied by 20% and placed on line 19. In my opinion, Line 19 is the QBI deduction amount after taking into consideration the phase out % for SSTB business. Despite this fact, Line 19 is titled Tentative QBI Component BEFORE limitations??? We have already taken out the phase out percentage in the first calculation. How can this number be BEFORE limitations.
Then the spreadsheet goes awry and multiplies Line 19 by the Phase Out % again (Line 26). Then it deducts Line 26 from Line 19 to arrive at the final QBI deduction.
So, essentially what the Worksheet is doing is multiplying the QBI income x phase in % x phase in % x 20% to arrive at the QBI Deduction. That is wrong!!
Specifics:
QBI Income: 348,331, Reduction Ratio: .3908, Applicable %: .6092
The QBI deduction should be 348,331 x .6092 x .20 = 42,441
In contrast, the worksheet essentially calculates it as 348,331 x .6092 x .6092 x .20 = 25,855
WHY!!!
