QBI for VIPKID Online English Teacher

[Anonymous]

Are online English teachers who are Independent Contractors through companies like VIPKID able to claim the Qualified Business Income deduction for 2019?

[GiseleD]

If you are an independent contractor, you can potentially take the QBI deduction. There are some limitations, which can be found in this original article. Alternatively, read on: 

The deduction amount depends on the taxpayer's total taxable income, which includes wages, interest, capital gains (etc.) in addition to income generated by the business. Once the taxable income reaches or exceeds $157,500 ($315,000 if filing jointly), the type of business also comes into play.

At incomes below that level, the deduction is 20% of either taxable income (minus capital gains and dividends) or the QBI, whichever is less.

At higher income levels, the deduction is reduced or eliminated, depending on the nature of the business. The calculations also get quite complicated, but TurboTax easily handles them and will figure out how much of a deduction you’re entitled to. To learn more, visit the IRS's QBI page here.

[Anonymous]

I only made 2k, so I wouldn't be over the income threshold. The address on my 1099 from VIPKID is San Francisco, but the company is a Chinese based company. I didn't know if that made a difference and if that qualified as “business effectively connected with the conduct of trade or business in the US”?

[AnnetteB6]

Since you are receiving a Form 1099-MISC for the work that you have done, you are being considered an independent contractor.  If you conducted your work in the US for your own self-employed business, then it would be considered Qualified Business Income (QBI).  It does not matter where the company is located that paid you for your work as long as you worked in the US.  

Take a look at the following TurboTax article for more details:  What is the Qualified Business Income (QBI) deduction?