Roquan, a single taxpayer, is an attorney and practices as a sole proprietor. This year, Roquan had net business income of $90,000 from his law practice (net of the associated for AGI self-employment tax deduction). Assume that Roquan pays $40,000 in wages to his employees, has $10,000 of property (unadjusted basis of equipment he purchased last year), and has no capital gains or qualified dividends. His taxable income before the deduction for qualified business income is $100,000. Calculate Roquan’s deduction for qualified business income.
Roquan, a single taxpayer, is an attorney and practices as a sole proprietor. This year, Roquan had net business income of $90,000 from his law practice (net of the associated for AGI self-employment tax deduction). Assume that Roquan pays $40,000 in wages to his employees, has $10,000 of property (unadjusted basis of equipment he purchased last year), and has no
Calculate Roquan’s deduction for qualified business income.
Introduction:-
The qualified business income deduction (QBI) is a tax break that allows self-employed and small-company owners to deduct up to 20% of their qualifying business income from their taxable income. To qualify, a single filer's total taxable income in 2021 must be less than $164,900, and a joint filer's total taxable income must be less than $329,800. The thresholds will increase to $170,050 for single taxpayers and $340,100 for joint filers in 2022. If your business income exceeds that threshold, sophisticated IRS procedures decide whether you qualify for a full or partial deduction.
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