topic Does taking the Qualified Business Income Deduction (QBID) mean I owe Social Security Taxes? in Get your taxes done using TurboTax

Does taking the Qualified Business Income Deduction (QBID) mean I owe Social Security Taxes?

greg71 — Wed, 10 Mar 2021 17:03:55 GMT

I'm wondering if by stating that rental income is Qualified Business Income and taking the 20% deduction, does that trigger the need to pay Social Security taxes?

I do not file a Schedule C, I've always reported rental income on Schedule E, and therefore don't have to pay Social Security taxes. I'm afraid if by answering yes, the rental income is a "business" for purposes of the QBID will the IRS say I owe Social Security taxes. How would I even pay those, since I don't file a Schedule C?

How do other people handle this?

Re: Does taking the Qualified Business Income Deduction (QBID) mean I owe Social Security Taxes?

MinhT1 — Wed, 10 Mar 2021 17:26:42 GMT

Taking the QBI deduction on your rental income does not make this income subject to self-employment tax.

Please read this IRS document for more information.

Re: Does taking the Qualified Business Income Deduction (QBID) mean I owe Social Security Taxes?

greg71 — Wed, 10 Mar 2021 18:48:15 GMT

Thanks Minh!

I've read the IRS document that you gave a link to. Of course it doesn't actually mention Social Security taxes by name. I suppose its too much to expect the IRS to simply/directly say whether taking the QBI Deduction makes rental income subject to self-employment taxes.

Is there a specific part of the document (or anything else) you can point me to that is interpreted to mean that taking the QBI Deduction does not make this income subject to self-employment taxes?

Thanks!

Re: Does taking the Qualified Business Income Deduction (QBID) mean I owe Social Security Taxes?

MinhT1 — Wed, 10 Mar 2021 20:56:04 GMT

Only self-employed income is subject to self-employment tax.

Rental income is not. The IRS has never requalified the rental income eligible to the QBI deduction as self-employed income.