R1 M6 - Section 199A Qualified Business Income Deduction

Question 1

Category 1: Taxpayer with taxable income at or below $191,950 (Single or H of H) or $3883,900 (MFJ (2024):

Answer:

Category 2: Taxpayer with taxable income above $241,950 (Single or H of H) OR $483,900 (MFJ) (2024):

Answer:

Answer 1

Category 1: Taxpayer with taxable income at or below $191,950 (Single or H of H) or $3883,900 (MFJ (2024):

** If QTB –> Full 20% QBI deduction**
** If SSTB –> Full 20% QBI deduction**

Category 2: Taxpayer with taxable income above $241,950 (Single or H of H) OR $483,900 (MFJ) (2024):

** If QTB –> Full W-2 wage, and property limitation applies**
** If SSTB –> No QBI deduction allowed**

Question 2

Which of the following is true about the qualified business income (QBI) deduction for taxpayers with taxable income above the taxable income limitations?

A.	If the taxpayer is a qualified trade or business (QTB), W-2 wage and property limitations are phased in.

B.	If the taxpayer is a specified service trade or business (SSTB), no QBI deduction is allowed.

C.	If the taxpayer is a specified service trade or business (SSTB), W-2 wage and property limitations apply.

D.	If the taxpayer is a qualified trade or business (QTB), W-2 wage and property limitations do not apply.

Answer 2

Choice “B” is correct. For a specified service trade or business (SSTB) over the taxable income limitation, no QBI deduction is allowed.

Choice “A” is incorrect. For a qualified trade or business (QTB) over the taxable income limitation, W-2 wage and property limitations apply in full and are not phased in.

Choice “C” is incorrect. For a specified service trade or business (SSTB) over the taxable income limitation, no QBI deduction is allowed.

Choice “D” is incorrect. For a qualified trade or business (QTB) over the taxable income limitation, W-2 wage and property limitations do apply.