Jenna Parker owns and manages her single-member LLC, which provides a wide variety of financial services to her clients. She is married and will file a joint tax return with her spouse, Paul. Her LLC reports $300,000 of net income, W-2 wages of $120,000, and assets with an unadjusted basis of $75,000. Their taxable income before the QBI deduction is $285.000 (this is also their modified taxable income). What is their QBI deduction for 2020

$57,000

Explanation:

Net Income reported = $300,000

W-2 Wages = $120,000

Assets with an adjusted basis = $75,000

Taxable income before QBI deduction = $285,000

Total taxable income from all source deduction(including standard deduction) = $1,200 for singles & $24,000 for married filling jointly

Calculation of QBI deduction for 2020

The maximum possible pass through deduction = 20% * $285,000 = $57,000

Hence, the income is not over $415,000. So he doesnt qualify for the W-2 wages deduction.

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