Tax Year Prior to 2020: QBI Deduction

Forum|Forum|7 years ago
March 31, 2019
1 reply
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Hello,

I have a consulting business that does not qualify for the QBI deduction unless we meet the $315k income threshold. My consulting business produces income less than this amount. What I would like some input on is does investment income and/or capital gains get added to your income threshold as I sold a second home and had a rather large capital gain that in combination with my consulting income would put me over the threshold. Thanks for your help.

KarenL

Employee Tax Expert

It's actually the opposite of what you said in your first sentence. Your consulting business does qualify for QBI unless you exceed the threshold amount. Please see below and this link for more details.

The specified service trade or business (SSTB) classification doesn’t come into play as long as total taxable income is under $157,500 ($315,000 if filing jointly). At higher income levels, the deduction for SSTBs is reduced and in some cases, eliminated.

For the purposes of the QBI deduction, an SSTB is defined as any trade or business that performs services in the fields of:

Accounting
Actuarial science
Athletics
Consulting
Health
Law
Performing arts
Financial services
Brokerage services (including investment management and investing, trading, or dealing in securities, commodities, or partnership interests)

Engineering and architecture were specifically excluded from the SSTB definition as it relates to this new deduction.

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huntinad

Level 2

Karen, your explanation to the other fellow gives me confidence you can help me as well. 🙂

Is there a way on TTax program to opt out of the QBI deduction, if I qualify, but don't want to take the deduction? (It appears my refund, with my large family, will actually be higher if I can remove the qbi deduction) ... Thanks,