Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

QBI deduction within phase-in range for an SSTB

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!

0 Cheers

This discussion has been locked. New comments cannot be posted on this discussion anymore. Start a new discussion

1 Solution

Accepted Solutions
mdavolio
Employee
Employee

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

 

View solution in original post

0 Cheers
2 Comments 2
mdavolio
Employee
Employee

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

 

0 Cheers
thakady
Level 1

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

 


 

0 Cheers