QBI credit

Forum|Forum|6 years ago
February 8, 2020
3 replies
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I have a serviced based business and my QBI section said this:

"Your tentative qualified business income deduction of $8,691 was limited to $3,816 (20% of taxable income minus net capital gains.) My income was $48,469. Why am I not getting the full 20% if I qualify for the deduction?

TurboTax Home & Biz Windows

Best answer by DavidS127

You are getting the full amount according to the rules.

According to the IRS (see Q6 at this link), the QBI deduction is the lesser of:

20 percent of the taxpayer's QBI, plus 20 percent of the taxpayer's qualified REIT dividends and qualified PTP income' or
20 percent of the taxpayer's taxable income minus net capital gain.

Note also that for a "specified service trade or business" there is also a limitation if your taxable income exceeds a threshold amount. For 2019, the threshold amount is $160,700 if single, $321,400 if married filing jointly.

DavidS127Answer

You are getting the full amount according to the rules.

According to the IRS (see Q6 at this link), the QBI deduction is the lesser of:

20 percent of the taxpayer's QBI, plus 20 percent of the taxpayer's qualified REIT dividends and qualified PTP income' or
20 percent of the taxpayer's taxable income minus net capital gain.

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sjh99

I have the same issue that it is limiting the deduction to the lower 20% of taxable income net of capital gain - I don't have any capital gain? Where did it get this?

THANKS!

DavidS127

If you are limited by the "20% of taxable income minus capital gain" rule, your taxable income is on line 11b and the capital gain to be subtracted is on line 6. If there is no capital gain on line 6, the 20% is applied to the line 11b amount.

If your are not receiving 20% of your QBI/REIT Dividends/PTP income, and 20% of your line "11b minus line 6" amount does not equal your QBI deduction, other limits may be at work. For example, there are limits when your taxable income exceeds the "threshold amount". See Q6 at this IRS website for more information on the limits that apply when your taxable income exceeds the threshold amount.

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rdipre

I have the same issue and I don't have anything on line 6 and I only have 60K total income...is this an issue with turbo tax?

Anonymous

the law specifies that QBI deduction is limited to 20% of taxable income reduced by long term capital gains and qualified dividends - code sec 199A(a)