On a K-1 with w-2 wages paid out of $150K and an income less than $315K threshold for QBI, is there the option of deducting the $150K in wages paid versus the QBI ded?

[beanet2]

Is is possible to choose between deducting W-2 wages paid to employees versus deducting the QBI deduction?  My QBI deduction is not limited but I had $150K in W-2 wages which seems like it would be a larger deduction than the $40K of QBI.  My income is reported on a K-1 as I'm a GP in a CPA firm.  

[DawnC0 · Accepted solution]

No, you do not have a choice.  If your total taxable income is less than $315,000 (married filing jointly taxpayers), the calculation is straightforward — 20% is applied to QBI or taxable income minus capital gains and dividends (whichever is less).  

[beanet2]

Is the $150K in wages that I paid to an employee deductible from my income?  That doesn't seem to be reflected in my forms or I don't know where to put it if it is possible.

[DawnC0]

Employee wages should already be deducted from the income reported on the K-1.    The K-1 shows your share of the partnership's income or loss that is yours because you are a partner.  You may or may not have received some of this as a cash distribution, but it is still income to you.

[beanet2]

Thank you!!  So very helpful.