topic Re: QBI dedcution in Retirement tax questions

QBI dedcution

acls2x — Thu, 11 Feb 2021 22:44:18 GMT

I am a sole proprietor. I have a solo 401 K but for purposes of this question I am not entering a contribution to it. If I enter 7000 as a contribution to a traditional IRA for my wife, Turbo tax is entering this on line 19 of schedule 1. This is reducing my qualified business income and thus my QBI deduction. First my wife is not a part of my business and has her own income source (SSI). Is this right? Maybe the rules changed this year but I ma reading things saying that a traditional IRA contribution should not reduce QBI

I could this as reasonable it if I contributed 7000 to a traditional IRA instead of my solo 401K as i have no W-2 income. Should I be able to also contribute to a traditional IRA without reducing my QBI

Re: QBI dedcution

ThomasM125 — Fri, 12 Feb 2021 03:10:22 GMT

An traditional IRA contribution should not reduce your QBI, if from you or your spouse.

Re: QBI dedcution

acls2x — Fri, 12 Feb 2021 01:04:39 GMT

That's what I thought but turbotax home and business is filling it in this way when using the interview forms. Is there a way to report it? I filled it in and eliminated it a few times to be sure. The QBI changes based on what I put in for a traditional IRA contirbution

Re: QBI dedcution

acls2x — Fri, 12 Feb 2021 01:05:31 GMT

Meant report it to turbo tax support?

Re: QBI dedcution

DawnC — Fri, 12 Feb 2021 01:29:34 GMT

A traditional IRA contribution does not reduce your QBI, but it does reduce your taxable income. And your QBI deduction is 20% of either taxable income (minus capital gains and dividends) or the QBI, whichever is less.

Re: QBI dedcution

acls2x — Fri, 12 Feb 2021 13:26:15 GMT

Thank you that's what I was missing. Makes sense