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mrosenfeld83
Level 1

Are you required to subtract your SE tax deduction from your net earnings to calculate QBI for purposes of the new 20% deduction? It doesn't appear in IRS instructions.

 
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TaxGuyBill
Level 9

Are you required to subtract your SE tax deduction from your net earnings to calculate QBI for purposes of the new 20% deduction? It doesn't appear in IRS instructions.

Yes.

The IRS released the Final Regulations a couple of days ago that clarified that (1) the 1/2 SE tax deduction, (2) Self Employed Health Insurance deduction, and (3) employer retirement contributions need to be subtracted from your business profit to determine "Qualified Business Income" (QBI) for the 20% deduction.

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2 Replies
TaxGuyBill
Level 9

Are you required to subtract your SE tax deduction from your net earnings to calculate QBI for purposes of the new 20% deduction? It doesn't appear in IRS instructions.

Yes.

The IRS released the Final Regulations a couple of days ago that clarified that (1) the 1/2 SE tax deduction, (2) Self Employed Health Insurance deduction, and (3) employer retirement contributions need to be subtracted from your business profit to determine "Qualified Business Income" (QBI) for the 20% deduction.

View solution in original post

mrosenfeld83
Level 1

Are you required to subtract your SE tax deduction from your net earnings to calculate QBI for purposes of the new 20% deduction? It doesn't appear in IRS instructions.

Thank you very much! Very helpful!
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