QBI deduction within phase-in range for an SSTB

[New to Proseries]

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!

[mdavolio · Accepted solution]

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

[thakady]

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.

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@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

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