QBI Deduction

[toddcrab]

Is there a phase out for regular (non-SSTB) businesses when it comes to the QBI deduction?  2021 is a bit of a strange year because many businesses are experiencing a huge increase in profits as they receive employee retention credits, etc.  I know there is a phase out for SSTB businesses, but I just want to be reassured that if businesses have a large uptick in profits in 2021, that their QBI deduction won't phase out to $0.

Let me just throw out a hypothetical.  Let's say you have an S-Corp (or LLC) with $3M in revenue in 2021, $1.4M in W-2 wages to non-owner employees, $100K to the owner's W-2, $400K in employee retention credits . . . that all results in a 40% profit of $1.2M for the year.  

Is this S-Corp/LLC owner going to still get a QBI deduction on their tax return?  Or does it phase out?  Can you share a sample calculation for a "high profit" year?  You can use my numbers above or other numbers.

Thanks.

[Mike9241]

you didn't provide enough info. an S-corp does not get the QBI deduction. the information is passed through to the shareholders who get it. there are many other elements to computing the QBI deduction which you did not provide.

you can do your own calculations. in Turbotax, there is a Qualified Business Income Component Worksheet.

fill it out starting with line 2. then once you get to line 31 you can use form 8995A to compute the allowable deduction.

I would think that the tentative QBI deduction in your situation would be 20% of QBI. but that's only tentative. other items on your return affect the allowable QBI