Joint tax return filing
This tax year, Jack and Jill file married filing jointly. Their modified taxable income is $486,800. Jack operates a business that is a NOT a SSTB with $170,000 of income and no W-2 wages are paid.
What is Jack and Jill’s QBI deduction amount for this tax year?
Homework Answers
DETERMINATION OF QBI DEDUCTION:
WHEN THE TAX PAYERS TAXABLE INCOME IS MORE THAN $421400 AND THE BUSINESS IN NOT A SSTB THEN THE QBI DEDUCTION IS LESSER OF:
1.20% OF INCOME i.e.,20% OF 170000 = 34000
2. The greater of :
a.50% of W-2 wages i.e.,(0*50%)=0
b.25% of W-2 wages ( 0 ) + 2.5% of UBIA of 0 = 0
Therefore JACK AND JILL'S QBI DEDUCTION is ZERO FOR THIS TAX YEAR
THIS EXAMPLE CLEARLY TELLS US THAT WHEN OUR TAXABLE INCOME IS MORE THAN THE THRESHOLD LIMIT BUT WE DONT HAVE EMPLOYEES OR ANY DEPRECIABLE MACHINERY THEN THERE WILL BE NO DEDUCTION.
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