topic Re: Qualified Business Income Calculation in Get your taxes done using TurboTax

Qualified Business Income Calculation

cowdogman — Fri, 01 Feb 2019 18:00:24 GMT

The IRS issued regs in January 2019 that reduced the amount of allowed QBI income--for purposes of calculating the QBI deduction.

For Schedule C filers like me the calculation goes something like this:

Net Schedule C Income minus retirement contributions (individual 401(k)) related to that Schedule C business minus 1/2 of SS/Medicare taxes for that business minus the self-employed health insurance deduction for that business.

It really reduces the benefit of the QBI deduction, but I can see the logic behind the reductions.

My question is how (and where) is TurboTax calculating the amount of QBI (not the QBI deduction, but the QBI itself)? The TT QBI amounts for my Schedule C businesses are (IMO) way off, but (strangely) the aggregate QBI in TT for all my businesses is very close to my Excel calculation.

Re: Qualified Business Income Calculation

cowdogman — Sat, 02 Feb 2019 15:46:20 GMT

To answer my own question: there is a new QBI worksheet at the bottom of the Schedule C form for each business. I'm still not sure the amounts are correct but at least I can see how TurboTax is calculating the income amounts.

Re: Qualified Business Income Calculation

cdavell — Tue, 05 Feb 2019 22:09:12 GMT

Thanks for your question and answer. I saw the box at the bottom of schedule C but am unclear on what to put there. Am I supposed to do a separate schedule? If so, is there a form for this?

Re: Qualified Business Income Calculation

cowdogman — Tue, 05 Feb 2019 22:19:49 GMT

Assuming you're not subject to the high income limits of the QBI deduction, TT will not need any input from you in calculating the QBI amounts (including the deduction). For me, I prepared 3 Schedule Cs, and TT calculated the QBI amounts for me--at the bottom of each Schedule C in TT.

I don't agree, however, with how TT calculated the QBI amounts for each Schedule C. TT prorated the Schedule C retirement savings and social security/medicare taxes across all three Schedule Cs, whereas I think the QBI amounts need to be calculated for each Schedule C. But the aggregate amounts across all 3 Schedule Cs are correct and so I don't really care.