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QBI deduction question

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  • QBI deduction question

    Good evening everyone,

    So I have a W2 full time job and a 1099 part time position. My 1099 is paid to a LLC. I recently heard about the qualified business income deduction (QBI deduction) and that it is capped at like 200k for service trades (which we are). My question is as follows: Is that cap only particular to my LLC income OR my W2 + LLC income since I am filing as a sole proprietorship?

    In order words, I am trying to see if I qualify for the QBI deduction.

    For simplicity sakes, let's assume each job pays 150,000 a year (again for simplicity sake), which means a combined income of $300,000 (between the 1099 and W2).

    Thanks in advance for any/all help.

  • #2
    The QBI phaseout range is based on your taxable income without the QBI deduction itself applied. It is not just earned income. It is your AGI less your standard or itemized deductions. This is explained in the Form 1040 instructions.


    • #3
      The W2 income is included in your phase-out income, but it is not part of the calculation for the 199A (QBI) deduction. If you are single, your QBI deduction will be partially phased out depending mostly upon how much income you are able to defer into a retirement plan or plans. Other deductions such as HSA contribution and std/itemized deductions will also move the needle toward more QBI deduction but tax planning can also help.
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


      • #4
        Thanks folks for the details. Kinda sucks, but what can I do .