QBI Woes

[Dilaudidopenia]

So numbers from my accountant came in.  Would save ~25k in federal and state taxes filing "married filing together" and taking the QBI deduction on my 1099 income. Problem is, spouse is working towards PSLF (more than halfway there, in fellowship year 2/3) in a (for physicians) lower paying field.  The difference between the MFS and MFJ loan payments amounts to ~30k for the year, making MFS the way to go I think.

Man, this stings.

 

[CordMcNally]

It's all a gamble on PSLF and with the data coming in, odds are against you.

[Dilaudidopenia]

CordMcNally wrote:

It’s all a gamble on PSLF and with the data coming in, odds are against you.

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Unless you know something I don't, I don't see any evidence to support this.  We follow the rules, file the employment certification form each year, and the FedLoan website keeps track of our qualifying payments pretty neatly.

[CordMcNally]

Dilaudidopenia wrote:

Unless you know something I don’t, I don’t see any evidence to support this. We follow the rules, file the employment certification form each year, and the FedLoan website keeps track of our qualifying payments pretty neatly.

Click to expand...

There was a thread on here in September about some of the data and less than 1% of applicants received forgiveness. Granted, a vast majority of these wouldn't have qualified in the first place. The point is, that's a scary percentage. I honestly don't know if there has been a "high income" person that has gotten forgiveness. There have been somebody who knew somebody who knew somebody that was high income stories and got forgiveness but, to my knowledge, we haven't heard directly from these high income people. I really hope it works out for those physician's counting on it. I'm just glad I'm not one of them.

[adventure]

Dilaudidopenia wrote:

CordMcNally wrote:

It’s all a gamble on PSLF and with the data coming in, odds are against you.

Click to expand…

Unless you know something I don’t, I don’t see any evidence to support this.  We follow the rules, file the employment certification form each year, and the FedLoan website keeps track of our qualifying payments pretty neatly.

Click to expand...

I the some of the reasons "not" to do PSLF are in this thread, this post is for it, and this one is both. There is just a lot of ado about it out there, and it's hard to get it right, and do it for 10 years. Not impossible, just hard.

[docnews]

Wait, how can a 2 physician couple be under $315k taxable income? Do you have a nonservice side business? Your accountant might have forgotten you are in a service industry. If that is the case no QBI for you anyways.

[Dilaudidopenia]

docnews wrote:

Wait, how can a 2 physician couple be under $315k taxable income? Do you have a nonservice side business? Your accountant might have forgotten you are in a service industry. If that is the case no QBI for you anyways.

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Wife is a fellow.  Threshold is 315k but phaseout goes up to 415k taxable income.  Also we maxed out my i401k and her 403b.

[bean1970]

docnews wrote:

how can a 2 physician couple be under $315k taxable income?

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guess you have never been in the military....we never even made it to 300K as dual attendings.......

[docnews]

Max benefit would be $15k at $315k taxable income.

See math at https://www.physicianonfire.com/tax-reform-physicians/

@bean1970, but no military doc is primary 1099. Most 1099 docs are higher income.

[bean1970]

@docnews I couldn’t tell from the post if OP was 100% 1099. It just said there was 1099 income. Can’t assume anything.

[bean1970]

@docnews though one clue may have been maxing out his solo401k

[docnews]

@bean1970 to get the qualified business deduction you have to be your own business.

Another thing in the OP, just to clarify the QBI shouldn't effect your state income tax unless your state gives you credit for federal deductions but I'm not well versed in this coming from a no income tax state.

[Dilaudidopenia]

docnews wrote:

Max benefit would be $15k at $315k taxable income.

See math at https://www.physicianonfire.com/tax-reform-physicians/

@bean1970, but no military doc is primary 1099. Most 1099 docs are higher income.

Click to expand...

docnews wrote:

@bean1970 to get the qualified business deduction you have to be your own business.

Another thing in the OP, just to clarify the QBI shouldn’t effect your state income tax unless your state gives you credit for federal deductions but I’m not well versed in this coming from a no income tax state.

Click to expand...

I guess the benefit my accountant is calculating is due to both the QBI deduction and baseline advantage of filing MFJ vs MFS

[bean1970]

docnews wrote:

o get the qualified business deduction you have to be your own business.

Click to expand...

is it 100% 1099? any W2 income is exclusionary???  i haven't paid much attention because i'm pretty sure we are phased out for anything beneficial to us (eh....not military physicians anymore.....those twenty plus years are past us.....)....it's all headed to the accountant this week.......

[docnews]

@bean1970 you can have w2 income and get the qbi on your 1099 income but your w2 income does add to the taxable income limit of $315k MFJ. But no W2 income (even if paid to from yourself in an s corp) can be deducted by QBI since it is employee income and not pass thru business income. Basically only income from a Schedule C counts.