It’s great to be able to claim the Section 199A deduction.
It’s not so great trying to calculate the deduction. Frankly, it’s a bear.
In order to clarify things, we’ll explain how the Section 199A qualified business income (QBI) calculation works in the case of a general partner who had guaranteed payouts for services and health insurance premium payments.
If you are looking for the best way to put more money in your pocket, read my new article titled Tax Tips: Q&A: How to Calculate and Improve Your QBI from a Partnership?
Three ways our fact-filled article can help you:
- You’ll meet “Sue,” a general partner in an LLC taxed as a partnership. To help you understand how Sue should approach calculating her Section 199A deduction, we’ll consider:
- The sources of her partnership income
- What her Form 1040 tax return will look like
- How she can possibly reduce the deductions for self-employment health insurance and one-half of the self-employment tax
- Why Sue doesn’t need to make a Form 1040 QBI adjustment for her self-employment insurance distribution
- Her self-employment tax situation, and more
To see how to use these facts to calculate Sue’s QBI, read the full article.
- We’ll give you some useful QBI tips. Sue is taxed on partnership income that comes to her in the form of guaranteed payments and profit distributions. Profit distributions are QBI. Guaranteed payments and Section 707(a) payments are not QBI. To increase QBI, you need to increase the profit distributions and reduce the guaranteed and Section 707(a) payments. Getting to this simply solution is not easy, but we’ll show you how to do it when you read the full article.
- You’ll learn why it’s so important to work with the right tax professional. If you’re looking for your best results, be sure to work with a tax professional who has a deep understanding of partnership tax law. This is an extremely complex subject and you need the best help available. All will be explained when you read the full article.