Qualified Business Income Deduction (for dummies!)

[@TheTaxGeek]

2024 UPDATE: 2024 "Low Threshold": Ordinary Taxable Income of $383,900 for Married Filing Jointly/Qualified Surviving Spouse, and $191,950 for all other statuses. 2024 "High Threshold": Ordinary Taxable Income of $483,900 for Married Filing Jointly/Qualified Surviving Spouse, and $241,950 for all other statuses.

[@dpgreene]

I find this form very clunky. It's odd what the IRS chooses to be worked out in the form vs off-form via instructions. Thank you for clarifying it!

[@TheTaxGeek]

I don't give my opinion on the tax code very often, but IMO QBID is one of the most needlessly overcomplicated provisions in the tax code.

[@truthseeker8766]

Excellent, thank you!!!

[@TheTaxGeek]

Glad it was helpful!

[@corduroy77]

Awesome vid, I couldn't understand business deductions FOR AGI vs FROM AGI before this, but I get it now. Def gonna help with my tax class. Thank you!

[@TheTaxGeek]

I'm so glad I could clear that up for you!

[@IRISFITZGERALD101]

Thank you for simplifying this.

[@TheTaxGeek]

You're very welcome!

[@FlaschDJ]

It is my understanding that Schedule C (Line 31) profit must be reduced by (1/2 Self-employment tax + Self-Employment Health insurance Deduction + IRA contributions) when tallying QBI.

[@TheTaxGeek]

Yes, that is covered in the video when "qualified business income" is defined.

[@jimmbbo]

Very helpful video. Subscribed!

[@TheTaxGeek]

Thanks! I'm glad you found it helpful!

[@tomtran8849]

Would you please help me to figure estimated tax payments for 1099 workers and /or W-2 ? Thank you.

[@seekinghimdaily92]

I honestly would recommend using QBO or Quickbooks Self-employed for that. They give a discounted first 3 months for the subscription.

[@graceharney7352]

excellent quality video and engaging, thank you so much! subbed

[@TheTaxGeek]

Thanks and welcome

[@amaliamayadiaz1380]

how would the ordinary taxable income be calculated for those "married filing jointly"?

[@TheTaxGeek]

It's based on both spouse's incomes, even if only one had qualified business income.

[@lieslceleste3395]

Can you help me out? I took another job but the job I left was so desperate that they paid me as a contractor. The work was essentially what I used to do for them. I received a 1099 Nec from them. Do I qualify for the QBI deduction? TT says no because I did the same work as a contractor as I did when I was a full time employee.

[@TheTaxGeek]

Yes, absolutely you can take a QBI deduction. If you are paid on a 1099 NEC, you are considered to be in business for yourself and the IRS expects the income to be reported on a Schedule C. Schedule C income is Qualified Business Income. I'm sorry that your employer chose to skirt payroll taxes and wage and hour laws by paying you as a contractor when you were, for all intents and purposes, an employee. But that doesn't mean you aren't entitled to a QBI deduction just like any other person in business for themselves.

[@lieslceleste3395]

@@TheTaxGeek Thanks. That’s not what happened though. They are relocating so I took another job. They then became desperate and offered me to work part time as a contractor until they presumably get someone else to take over. Turbo Tax asks if it’s essentially the same job. (I’m guessing the govt doesn’t want an end run around just for the company to avoid taxes) It’s only the same job in the sense that I’m doing a small portion of what I used to do for them. I have a full time job with another company. I was worried that the IRS would disallow the QBI deduction.

[@TheTaxGeek]

I believe that TT asks you that question is to see if you want to file Form SS-8, to reclassify your work as an independent contractor as an employee. Don't do that, it stirs up a huge hornets nest for both you and your (former) employer. Go ahead and file your NEC on a Schedule C. You'll pay some self-employment tax, but get the QBID. The IRS will not question it.

[@lieslceleste3395]

@@TheTaxGeek Thanks. It really isn’t the same job anyway since I’m only doing a very small portion of the original job. I have a full time job at the new place. I just thought I’d help them out and make a little extra money. Thanks again for your help.

[@zoeskyla]

Can u be qbi last yr and non qbi this yr?

[@TheTaxGeek]

Yes.

[@kidanegebremariam3497]

Not helpful. You did not show how to fill out the QBI as your topic says.