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Does self-employed DB contribution reduce qualified business income

Forum|Forum|6 years ago
December 7, 2019
18 replies
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self-employed client has Defined Benefit contribution. But, in Lacerte, this DB contribution does not reduce QBI from net profit in Schedule C. Is this correct?

For example, he has $100,000 net incomes and contribute $60,000 to his DB in 2018. Lacerte show QBI for $96,900 (just reduce 1/2 of self-employed taxes), and he will have 20% QBI deduction on this $96,900.

I thought retirement plan contribution should be back out of QBI.

Lacerte Tax

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Best answer by Kathi_at_Intuit

This was implemented in an update on 3/19. I just checked my Lacerte and I do see when I click on the WKS for line 9 that the Defined Benefit is reducing QBI.

George4Tacks

Level 15

@Kathi_at_Intuit Is this being looked at?

Answers are easy. Questions are hard!

H

hgtcAuthor

Level 5

I checked those similar questions below. But, my question is on "calculation of incomes subject to QBI". Do you know if self-employed DB contribution should be deducted from Sch C income before QBI calculation?

George4Tacks

Level 15

Look at https://proconnect.intuit.com/tax-reform/entity-selection-calculator/

Answers are easy. Questions are hard!

E

Ember123

Level 5

For a sole proprietor with no employees who makes contributions to both a profit sharing plan and a defined benefit plan Lacerte deducts the profit sharing contribution in arriving at QBI but not the defined benefit contribution. Perhaps Lacerte is doing this because the DB contribution calculation is not based solely on Schedule C income but takes into account other factors such as age and DB account balance. I have not found any definitive guidance on this in any income tax regulation, IRS guidance, etc.

Kathi_at_Intuit

Answer

Moderator

This was implemented in an update on 3/19. I just checked my Lacerte and I do see when I click on the WKS for line 9 that the Defined Benefit is reducing QBI.

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itonewbie

Level 15

DB contribution to a qualified plan for the self-employed individual is deductible on Line 28. Deduction for contributions for employees are, on the other hand, deductible on Sch C.

It does not appear Lacerte/PTO are taking the DB contribution into account even though it does correctly take into account SEP-contribution deductions. This is clearly a glitch that should be fixed.

---------------------------------------------------------------------------------Still an AllStar

itonewbie

Level 15

@Kathi_at_Intuit @Intuit Austin This is a glitch in Lacerte/PTO. Could you please take a look and give us an update? Thanks!

---------------------------------------------------------------------------------Still an AllStar

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