topic QBI deduction (phased in reduction) in Deductions & credits

QBI deduction (phased in reduction)

daveterri81 — Mon, 15 Mar 2021 17:43:43 GMT

I have QBI that is from an SSTB and my income is within (but not greater than) the phase-out range. I understand that a portion of my QBI will be reduced, however the Turbo tax software seems to be reducing it twice. It is first reduced on rows 5 through 11 of the Form 8995A Schedule A Smart Worksheet. This reduced amount carries to Line 2 of Form 8995-A, where it is subsequently reduced again in Part III of that form. This does not seem right to me. I may have input something wrong but I can't figure out where. Has anyone else seen this? Is it correct? Any suggestions?

Re: QBI deduction (phased in reduction)

DaveF1006 — Mon, 15 Mar 2021 20:59:22 GMT

It depends. I assume this is reported from a K-1. Can you clarify this by telling me if:

If this a K-1 from an S-Corp or partnership?
The amounts listed in each box of the K-1.
Once I have this information, I will test this in my software to see if I get the same results as you.

Re: QBI deduction (phased in reduction)

daveterri81 — Tue, 16 Mar 2021 20:02:36 GMT

Yes, there is a K-1 involved. It is for a partnership. The amounts on the K-1 are:

Row 1: 19,356

Row 14a: 19,356

Row 14c: 30,371

Row 19a: 19,237

Row 20, Code Z:

Ordinary income 19,356

Self-employment income 19,356

(The SSTB box is also checked yes on row 20)

The K-1 is the biggest part of my QBI, but I also have $8,279 of Schedule C income which is eligible QBI and is a SSTB. Both the K-1 income and the Schedule C income are getting the same calculation of QBI. I am attaching pictures of the Form 8995-A and the 8995A Schedule A smart worksheet from turbo tax. Thanks so much for your help on this.

Dave

Re: QBI deduction (phased in reduction)

ThomasM125 — Tue, 16 Mar 2021 23:21:05 GMT

There is a phase-out of the deduction based on your income under normal QBI rules, then there is an additional phase-out if you are a SSTB, that is why it appears you are being hit twice with phase-outs.

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