Solved

Wages calculation for QBI

Forum|Forum|3 years ago
March 8, 2023
1 reply
0 views

I have reported payroll W2 wages in TT business. In the end, TT Business gives me an opportunity to adjust wages for Section 199 (QBI).

Question:

- Should i leave the TT recommended W2 wages for QBI

- Should I add my personal 401k contribution to W2 wages and report that?

- Is there anything else that i can add to W2 wages

As per my understanding, there are 3 calculation methods available, but the differences between them are not clear. Can somebody give an example of three methods (unmodified box method, modified box method etc.) using a sample W2? Which is the preferred method?

Until last year, i left the wages to be the same as what TT business recommended with no adjustments.

Thanks

Hash

TurboTax Business Windows

Best answer by PatriciaV

Yes, you should add your Sec. 401(k) contributions to your wages for QBI. This is essentially the Modified Box 1 Method. The Unmodified Method would result in a lower amount (wages only); the Tracking-wages Method is useful only if you have more than one business.

See this article from the Tax Advisor for a clear discussion of the QBI wages topic: Computing qualified W-2 wages for Sec. 199A purposes.

Note that 401(k) contributions are reported on Form W-2 Box 12 Code D.

PatriciaVAnswer

Employee

Yes, you should add your Sec. 401(k) contributions to your wages for QBI. This is essentially the Modified Box 1 Method. The Unmodified Method would result in a lower amount (wages only); the Tracking-wages Method is useful only if you have more than one business.

See this article from the Tax Advisor for a clear discussion of the QBI wages topic: Computing qualified W-2 wages for Sec. 199A purposes.

Note that 401(k) contributions are reported on Form W-2 Box 12 Code D.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"