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2021 Roth Conversion considering QBI phase out

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  • 2021 Roth Conversion considering QBI phase out

    I plan to do Roth conversion up to 2021 MFJ 32% tax bracket [$326k].

    However, I am in a partnership that qualifies for QBI. For 2021 the QBI phase-out start at $329k for TOTAL INCOME [not taxable income]

    Our projected total income for 2021 is just under $320k, but our taxable income will likely only be $180k.

    So our next dollar in taxable income will be around 24%, but each dollar we add will reduce our QBI into the phase out for total income.

    How are others thinking about this? Is there a formula or spreadsheet to use? Or do I just need to 'run the numbers' and see what each additional $10,000 of conversion will do to my taxes?


  • #2
    Originally posted by runfast00 View Post
    For 2021 the QBI phase-out start at $329k for TOTAL INCOME [not taxable income]
    That is not correct. See Form 1040 and the Form 1040 instructions

    It is based on your taxable income not including the QBI deduction itself. To look at it another way, it is your AGI minus either the standard deduction or itemized deduction whichever applies

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    • #3
      Thank you spiritrider - I see my error. AGI Form 1040 line 11 minus [standard or itemized] for determining QBI phase out.

      The QBI calculation trips me up each year.

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