Solved: Is the Qualified Business Income Deduction based off the Schedule C income? Or is it off your total gross? My head is spinning......
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Is the Qualified Business Income Deduction based off the Schedule C income? Or is it off your total gross? My head is spinning......

 
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Is the Qualified Business Income Deduction based off the Schedule C income? Or is it off your total gross? My head is spinning......

It depends.  If your personal taxable income is under the threshold of $157,500 for single or $315,000 for joint, then the calculation will be for 20% of EITHER the qualified business income (see definition below) less any self-employed taxes, health or retirement expenses OR 20% of your taxable income (except capital gains and dividends) whichever is LESS.  For income above the threshold ranges, the calculation is different and can be found in the FAQ below.

For the purposes of the deduction, QBI is defined as net business income, excluding:

  • Income generated outside the United States
  • Investment income
  • W-2 compensation paid to an S corporation owner
  • Guaranteed payments to a partner
  • Income from REITs, publicly traded partnerships, and qualified cooperatives (these entities may qualify for a 20% deduction under a different set of rules, the explanation of which is beyond the scope of this FAQ).
The above definition, plus more information can be found in the QBI FAQ below:


A QBI deduction worksheet will be included with your tax return.  To preview your 1040 form before filing, follow these steps below:


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New Member

Is the Qualified Business Income Deduction based off the Schedule C income? Or is it off your total gross? My head is spinning......

It depends.  If your personal taxable income is under the threshold of $157,500 for single or $315,000 for joint, then the calculation will be for 20% of EITHER the qualified business income (see definition below) less any self-employed taxes, health or retirement expenses OR 20% of your taxable income (except capital gains and dividends) whichever is LESS.  For income above the threshold ranges, the calculation is different and can be found in the FAQ below.

For the purposes of the deduction, QBI is defined as net business income, excluding:

  • Income generated outside the United States
  • Investment income
  • W-2 compensation paid to an S corporation owner
  • Guaranteed payments to a partner
  • Income from REITs, publicly traded partnerships, and qualified cooperatives (these entities may qualify for a 20% deduction under a different set of rules, the explanation of which is beyond the scope of this FAQ).
The above definition, plus more information can be found in the QBI FAQ below:


A QBI deduction worksheet will be included with your tax return.  To preview your 1040 form before filing, follow these steps below:


View solution in original post

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Is the Qualified Business Income Deduction based off the Schedule C income? Or is it off your total gross? My head is spinning......

OK, so my Schedule C income is about $14000 from my travel agency, my W-2 Income from my wifes and my job is about 160,000, so it will be % of the $14000.  Do I understand this right?
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Is the Qualified Business Income Deduction based off the Schedule C income? Or is it off your total gross? My head is spinning......

The two components are taxable income (all income less deductions) or qualified business income which is schedule C less any self employed expenses such as SE taxes, or SE health deductions, etc.  A worksheet is included with your return of how the deduction was calculated.  I'll add an instruction above for how to preview your return before filing.  
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