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Sch C 199A


Randall

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I think we've discussed this.  Half of SE tax and SE Health ins deduction and contributions to SEP, SIMPLE plans come off the Sch C profit in calculating QBI.  What about Traditional IRA and HSA contributions.  Client has no W2 income or spouse with earnings.  My latest PPC references just says the above 3, doesn't mention Trad IRA or HSA.  Looking for confirmation.

 

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5 minutes ago, Terry D said:

IRA, SEP, & Simple Plans are NOT a business operating expense. Correct me if I'm wrong, but I thought SE Health Ins, SEP and simple plans were deducted on the 1040 and not the C. These items are not used to calculate the QBI. 

They are not deducted on Sch C.  But for purposes of calculating the QBI, half of SE  tax and SE Health ins and contributions to qualified retirement plans under IRC Sec 404 are deducted for QBI purposes.  Reg 1.199A-3(b)(1)(vi)   I was asking about traditional IRA and HSA in this context which I don't think are deducted.

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I think Randall is correct, based on what I've read in the more recent IRS "clarifications" but am just about to dig into my SE clients so haven't confirmed the above.

Terry, the reason that those three items Randall mentioned are singled out is precisely because they are NOT on the Schedule C and need to be separately accounted for in the QBI computation.

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A recent update in ATX has added input spaces specifically for these three items.  Their 199A worksheet auto fills the Sch C profit and you have to manually input the amounts for these three items.  Then the ATX worksheet deducts them before calculating the 20%.

 

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