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daveterri81
New Member

QBI deduction (phased in reduction)

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?

3 Replies
DaveF1006
Expert Alumni

QBI deduction (phased in reduction)

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

  1. If this a K-1 from an S-Corp or partnership?
  2. The amounts listed in each box of the K-1.
  3. Once I have this information, I will test this in my software to see if I get the same results as you.
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daveterri81
New Member

QBI deduction (phased in reduction)

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

Form 8995-A, Page 1.jpgForm 8995-A, Page 2.jpgSchedule A Smart worksheet.jpg

 

 

ThomasM125
Expert Alumni

QBI deduction (phased in reduction)

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.

 

You may find this article helpful:

 

What is the Qualified Business Income (QBI) deduct... (intuit.com)

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