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It appears the phase-in is being applied twice. First, at the QBI calculation level and then when calculating the actual deduction. So my QBI is getting reduced by the applicable percentage (based on the phase-in) and then the QBID at 20% of the already reduced QBI is getting reduced again by the same %. Is this correct?
I am aware of the phase-in range calculation, just didn't know it would be applied twice. Thanks!
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mdavolio
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Hi,
Please refer to IRS Publication 535, Chapter 12: https://www.irs.gov/pub/irs-pdf/p535.pdf
The way the worksheets / computations work is that for Specified Service Trades or Businesses which are in the phase-out range, you mulitply Qualified Business Income, W-2 Wages and Unadjusted Basis in depreciable property by a phase-out percentage (see Schedule A).
Then those reduced amounts for QBI, Wages, UBIA flow into Worksheet 12-A on lines 2, 4 and 7. Worksheet 12-A then applies the 1) Wages / UBIA limitation (along with a phase-in if taxable income is above the threshold) and the 2) 20% Taxable Income limit.
Thank you,
Mike D'Avolio
Intuit
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I looked up those worksheets and did the calculation manually and it yields a higher deduction than what Turbo tax is calculating. The reduction does not appear to be applied twice on these worksheets.
@mdavolio wrote:Hi,
Please refer to IRS Publication 535, Chapter 12: https://www.irs.gov/pub/irs-pdf/p535.pdf
The way the worksheets / computations work is that for Specified Service Trades or Businesses which are in the phase-out range, you mulitply Qualified Business Income, W-2 Wages and Unadjusted Basis in depreciable property by a phase-out percentage (see Schedule A).
Then those reduced amounts for QBI, Wages, UBIA flow into Worksheet 12-A on lines 2, 4 and 7. Worksheet 12-A then applies the 1) Wages / UBIA limitation (along with a phase-in if taxable income is above the threshold) and the 2) 20% Taxable Income limit.
Thank you,
Mike D'Avolio
Intuit
