It depends. The deduction on line 8 (standard or itemized deductions) comes immediately after Adjusted Gross Income (line 7) has been determined. However, line 9 (QBI, Section 199A deduction) is determined differently. The 20% Section 199A deduction is taken on the lower amount of qualified business income and taxable income (line 10, not line 4a). Line 4b is the taxable amount of a pension or an IRA distribution and has nothing to do with the QBI calculation. In more detail, here is how the QBI calculates:
The 20% QBI deduction calculation compares the difference between 20% of the QBI (your Schedule C net income, minus any other deductions attributable to your Schedule C income, which encompasses deductions such as the solo 401K deduction, Self-Employed Health Insurance Deduction attributable to the business, and 1/2 of SE tax being deducted on your return) and 20% of your Taxable Income (which encompasses other deductions and income amounts) Whichever amount is lower is the QBI deduction.
For instance, let's say you are single and self-employed (using the standard deduction) with 50,000 of net self-employment income, and no additional wages. One-half of SE tax and your SE health insurance premiums lowers your net business income to 42000. 20% of your net business income is 8400. However, your taxable income is 30,000, and 20% of 30,000 is $6,000. On your 1040, Line 8 would be $12,000, and Line 9 would be 6,000.
For more information on the QBI deduction, see the following FAQ: https://ttlc.intuit.com/replies/7019998
It depends. The deduction on line 8 (standard or itemized deductions) comes immediately after Adjusted Gross Income (line 7) has been determined. However, line 9 (QBI, Section 199A deduction) is determined differently. The 20% Section 199A deduction is taken on the lower amount of qualified business income and taxable income (line 10, not line 4a). Line 4b is the taxable amount of a pension or an IRA distribution and has nothing to do with the QBI calculation. In more detail, here is how the QBI calculates:
The 20% QBI deduction calculation compares the difference between 20% of the QBI (your Schedule C net income, minus any other deductions attributable to your Schedule C income, which encompasses deductions such as the solo 401K deduction, Self-Employed Health Insurance Deduction attributable to the business, and 1/2 of SE tax being deducted on your return) and 20% of your Taxable Income (which encompasses other deductions and income amounts) Whichever amount is lower is the QBI deduction.
For instance, let's say you are single and self-employed (using the standard deduction) with 50,000 of net self-employment income, and no additional wages. One-half of SE tax and your SE health insurance premiums lowers your net business income to 42000. 20% of your net business income is 8400. However, your taxable income is 30,000, and 20% of 30,000 is $6,000. On your 1040, Line 8 would be $12,000, and Line 9 would be 6,000.
For more information on the QBI deduction, see the following FAQ: https://ttlc.intuit.com/replies/7019998