Modified QBI Deduction for SSTB

[cfellion]

I have a client who received a W2 (Box 1 Wages $67,548) and also received a 1099 NEC from the same company ($21,706). The client files as Single and had no other income. We put the 1099 NEC income on a Sch C and were able to deduct some expenses from it. The business performs investment advisory services - so it is a SSTB.

Should ProSeries be calculating a modified QBI deduction with his taxable income under the threshold amount of $197,300? I am thinking I missed something; missed a step somewhere. 

Can anyone point me in the right direction on this? 

Thanks!

[rbynaker]

Which direction are they going in?  Was 1099, now W-2 or the other way around?

Be aware of this IRS position from the 8995-A instructions (page 2):

https://www.irs.gov/pub/irs-pdf/i8995a.pdf

If you were previously an
employee of a business and continue to provide substantially the
same services to that business after you’re no longer treated as an
employee, there is a presumption that you’re providing services as
an employee for purposes of section 199A for the 3-year period after
ceasing to be an employee. You may rebut this presumption on
notice from the IRS by providing records such as contracts or
partnership agreements that corroborate your status as a
nonemployee.

[cfellion]

Good point.

This individual is still an employee of the company. 

The 1099 NEC amount is supposed to represent a "bonus".

Still a very thin line.

[rbynaker]

That's not how bonuses work.

See Form 8919.