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Level 2
posted Feb 13, 2021 3:16:06 PM

Do I qualify for a QBI deduction if I did freelance contractor work for 6 months of 2020 then became a W2 employee the rest of the year?

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1 Replies
Expert Alumni
Feb 13, 2021 4:02:26 PM

Yes. Please see this LINK for more information.

 

Q1. What is the Qualified Business Income Deduction?

A1. Section 199A of the Internal Revenue Code provides many taxpayers a deduction for qualified business income from a qualified trade or business operated directly or through a pass-through entity. The deduction has two components.

  1. Eligible taxpayers may be entitled to a deduction of up to 20 percent of qualified business income (QBI) from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust or estate. For taxpayers with taxable income that exceeds $315,000 for a married couple filing a joint return, or $157,500 for all other taxpayers, the deduction is subject to limitations such as the type of trade or business, the taxpayer’s taxable income, the amount of W-2 wages paid by the qualified trade or business and the unadjusted basis immediately after acquisition (UBIA) of qualified property held by the trade or business. Income earned through a C corporation or by providing services as an employee is not eligible for the deduction.