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Video instructions and help with filling out and completing does farm income qualify for qbi
Let's talk about the qualified business income deduction or the qbi deduction you might hear the the the initials qbi from time to time this was a provision in the new tax law passed last December it's effective for tax years 2021 going forward it was passed in reaction to the fact that they lowered the corporate C corporation tax rate to 21 percent or in that range but they didn't address all the other type of business entities this addresses the other types of entities such as partnerships S corporations LLC's sole proprietorships those are all eligible for this deduction now this deduction is kind of a new animal it is not an adjustment it is not a credit it is a reduction of taxable income and and it will appear on line 9 of the 1040 if you think of last year's tax return go on page 2 of last year's return you would start with adjusted gross income you'd get to subtract your standard deduction or your itemized deduction and then you'd subtract your exemption amount and then you'd come up with your taxable income well as you know they got rid of exemptions so this item is plugged in to where exemptions used to be on the return so it's now adjusted gross income minus the standard or itemized deduction - the qbi deduction equals the taxable income for our purposes it really is going to apply to Schedule C income as you know Schedule C income is for self-employed independent contractors and Schedule C income now appears on line twelve of schedule one it's been moved to one of the schedules schedule one line twelve it's calculated the same way as it has in the past it's just been moved off of the main 1040 and moved to schedule one as I said earlier other and types of business entities can get this deduction however they are out of scope for us if you think a partnership for example will get a k1 and it has business income on it were that's out of scope for us when we do K ones we do interest dividends capital gains those sorts of things if they're a true partnership and they're one of the partners and they get a k1 that is not a type of return we do so they can get this qbi deduction but we won't be doing it will be dealing with Schedule C income also there's a new box five on a 1099 dividend form that box five amount is a real estate investment trust dividend that does qualify for this deduction as well so it's Schedule C income plus the Box five on the 1099 dividend now one of their item here if the taxable income of the taxpayer exceeds one hundred and fifty seven thousand five hundred for any filing status other than married filing jointly where the amount is three hundred and fifty three hundred and fifteen thousand.