Does 1099-MISC income which is reported on Schedule C normally qualify for QBI deduction? When would it not? This income is for services.

[qbteachmt · Accepted solution]

The 1099-Misc doesn't go on a Sched C. All earnings from the consulting operation are on the Sched C. The operation(s) that results in the Sched C is what is subject to the QBI regulation.

The 1099-Misc is a notational function, which means it is used for reporting what happened when it meets the reporting threshold. It doesn't define anything regarding the QBI. If your client made $5m from consulting, but no one paid more than $599, there would never be any 1099-Misc forms used for reporting.

You are relating things that do not relate.

[abctax55]

A F.1099-C doesn't go on Sch C.

It is for cancellation of debt.

[paul7]

I am sorry, I meant 1099-MISC.

[abctax55]

The nature of the Sch C business dictates whether it is qualified for QBID.  Research SSTB.

[paul7]

Thank you Abctax55. I couldn't find anywhere that clearly spelled out who could and who could not claim the QPID for 1099-MISC income.  Perhaps I'm thinking too much into it. When reading the IRS "Tax Cuts and Jobs Act, Provision 11011 Section 199A - Qualified Business Income Deduction FAQs" it says you are exempt from the QBID if you are a C-Corp (check, sole-prop), SSTB consideration (income is under threshold so this doesn't apply), and cannot be performing services as an employee (the fact she received a 1099-MISC leads me to believe she's not considered an employee).  This person is a Speech Pathologist who is a W2 employee with main employer, but also provides the same services to other entities, who pay her a contractor.

[sjrcpa]

It sounds like the net Sch C income, with the adjustments for SE tax, SE health ins, etc is Qualified Business Income eligible for the deduction.

[itonewbie]

Agree with Anna and Susan.  As Anna suggested, watch out for SSTB.

[sha414]

What line on Schedule C does the 1099-MISC Will gave Grace get reported on?

[sha414]

line 1 10 11 or 26

[abctax55]

We don't help with homework here.... ask your teacher/read your textbook (do those exist anymore ?)

[qbteachmt]

@sha414 

Will might need to confirm if he used the right tax form for 2020.