topic Tax Year Prior to 2020: QBI for independent contractor in Get your taxes done using TurboTax

Tax Year Prior to 2020: QBI for independent contractor

hb4 — Thu, 11 May 2023 16:46:12 GMT

During 2019 my (former) employer converted me to an independent contractor. I was required to resign my position and agree to a new IC agreement with the company. I perform essentially the same work. Worked remotely (from home) before and after this transition. My income is now reported on a 1099-MISC rather than a W2.

Can I claim this as Qualified Business Income (QBI)?

I understand that the IRS may view my 1099 income as wages, but I can document the change from employee to IC, and that appears to allow me to claim this income as QBI income.

Re: QBI for independent contractor

AmyC — Tue, 04 Feb 2020 20:02:44 GMT

No, you may not claim QBI on income for a job where you were once a W2 employee. The IRS specifically did not want to incentivize 1099misc treatment due to QBI. The following link is from the federal register and explains it.

Qualified Business Income Deduction - Federal Register

Feb 8, 2019 - The regulations will affect individuals, partnerships, S corporations, trusts, ... of qualified business income (QBI), qualified real estate investment trust ... and would cause former employees to not claim the deduction in order to ..

Re: QBI for independent contractor

vp4 — Thu, 05 Mar 2020 09:23:30 GMT

Hi @AmyC

If I was on W2 and was laid off last May (documented separation agreement) and later came back to the same employer in September on 1099 when they needed help performing the same duties, do I still say the wages are for a former employer? (I didn't get converted)

Re: QBI for independent contractor

WKins2 — Thu, 05 Mar 2020 23:29:06 GMT

Yes, according to the IRS, you will need to report it that way.