QBI questions

[cmallow17]

Hi there!

I'm reading about the rules around QBIs, and it says that SSTBs are excluded. "Consulting" is listed as an SSTB.

Can you elaborate more on what "consulting" covers? I feel like that is a super broad term! 

I'm leaving my current employer to become a freelance consultant, providing trainings, facilitating policy reviews, conducting internal audits, etc. Would that be excluded from the QBI deduction because I'm a "consultant"?

Additionally, I'm planning to establish an LLC to provide wellness and coaching services - would that qualify as consulting?

If you can recommend any good resources to better understand QBI, I'd be very happy to receive them.

Thanks for the clarification! 

[Denisev1220]

Consulting is specifically excluded from the deduction if taxable income is greater than the threshold amount.  For 2021 the threshold is:

• Married Filing Joint- $329,800 with a prorated deduction for income up to $429,800
• Married Filing Separate-$164,925 with a prorated deduction for income up to $214,925

Individuals with taxable income below these threshold levels are not subject to the limitations. 

specified services 

[capiower]

Cmallow17 

Thank you for your question about SSTBs and exactly what they are:

The IRS defines SSTB in the following manner: 

"An SSTB is a trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading or dealing in certain assets, orr any trade or business where the principal asset is the reputation or skill of one or more of its employees or owners"

Seeing as your consulting business depends on your personal skills and/or reputation that would qualify as an SSTB, as would the wellness couching as it is in the health industry.

Here are some links for more information on QBI:

https://www.irs.gov/newsroom/facts-about-the-qualified-business-income-deduction

https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-provision-11011-section-199a-qualified-business-i...

Hope this helps to clear up some of the confusion.

Michelle T

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[ee-ea]

IRC regulations will answer your question.    Sharpen your machete because I am sending you on a safari thru tax law.  

https://answerconnect.cch.com/federal/arp12a5bd58887ce91000823290b11c18c90201SPLIT199Ad/regulations/...