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Turbo tax is subtracting self-employment tax deduction from my business income in order to determine my Qualified business income. What IRS doc says to do this?
Example results of turbo tax software:
QBI deduction: $3,944
From the 1040 instructions, page 34, "Determining Your Qualified Business Income": "It also includes other deductions attributable to the trade or business including, but not limited to, deductible tax on self-employment income"
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Turbo tax is subtracting self-employment tax deduction from my business income in order to determine my Qualified business income. What IRS doc says to do this?
Yes, that subtraction is the required per the Final Regulations issued on January 15, 2019. Also required to be subtracted are the deductible portion of self-employment taxes and the deduction for self-employed health insurance. The instructions for Form 1040 were written before the regulations were finalized and are (purposefully?) vague as to what Qualified Business Income is with respect to a sole-proprietor.
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Turbo tax is subtracting self-employment tax deduction from my business income in order to determine my Qualified business income. What IRS doc says to do this?
Yes, that subtraction is the required per the Final Regulations issued on January 15, 2019. Also required to be subtracted are the deductible portion of self-employment taxes and the deduction for self-employed health insurance. The instructions for Form 1040 were written before the regulations were finalized and are (purposefully?) vague as to what Qualified Business Income is with respect to a sole-proprietor.
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Turbo tax is subtracting self-employment tax deduction from my business income in order to determine my Qualified business income. What IRS doc says to do this?
IRS is basically saying, "The self-employment tax deduction you received is attributable to your business and therefore reduces your QBI for this 199A deduction"
From page 44, "Thus, for purposes of section 199A,
deductions such as the deductible portion of the tax on self-employment income under
section 164(f), the self-employed health insurance deduction under section 162(l), and
the deduction for contributions to qualified retirement plans under section 404 are
considered attributable to a trade or business to the extent that the individual’s gross
income from the trade or business is taken into account in calculating the allowable
deduction, on a proportionate basis. "
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