Question

In 2019, Meghann Carlson, a single taxpayer, has QBI of $110,000 and modi-fied taxable income of $78,000 (this is also her taxable income before the QBI deduction). Given this information, what is Meghann’s QBI deduction?

Answer 1

QBI Deduction is $15,600

Step-by-step explanation:

QBI is Qualified Business Income and it represents the net sum of qualified income, deduction, loss and gain from qualified businesses or trades such as trusts, partnerships and sole proprietorship among others.

THE QBI deduction allows small business owners or self-employed eligible individuals to subtract up to 20 percent of their QBI from their taxes.

The QBI deduction of 20% should be deducted from the lower of QBI or taxable income.

FOr Meghann, QBI is $110,000 and taxable income is $78,000. Therefore, the QBI deduction will be 20% of the lower (taxable income)

QBI Deduction = 0.2 x $78,000= $15,600