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Schedule C Gross receipts is different from 8995 Qualified Business Income - how is 8995 income calculated?

Forum|Forum|4 years ago
April 13, 2022
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I did computer programming work and was paid 29,213 gross in 2021. It is listed on Schedule C, line 1, as Gross Receipts or sales. Form 8995 Line 1 i shows "Qualified Business Income or (loss) of 27,149.

The difference of 2082 is not 10 or 20 percent of either figure; I don't know where the 8995 figure comes from. Can someone tell me where it is calculated? It is NOT the Qualified Business Income Deduction, because form 8995 does calculations for that based on its 27,149 figure.

Best answer by VolvoGirl

Ok I came up with the same amount.

Schedule C income is 29,213

the SE tax on that is 4127.66

1/2 the self employment tax is 2,063.83.

So income - 1/2 SE tax is 27,149 (29,213-2,064)

VolvoGirl

Did you have any expenses? It probably uses the Net Profit on Schedule C line 31.

R

ralphcookAuthor

I apologize, I gave incomplete information. As is common as a programmer, I had no expenses. My Schedule C lists the 29,213 figure on lines 1, 3, 5, 7, 29, and 31, and there are no other numbers on any other lines. I checked boxes indicating a cash accounting method, and that I did not make any peyments that would require me to file 1099. Page 2 of the Schedule C has nothing filled in at all.

R

ralphcookAuthor

to try to qualify further: the TurboTax "Qualified Business Income Component Worksheet" shows 27,149 under a column heading of "QBI"; the fact that it is called "Qualified Business Income" makes me think it is different from the gross receipts, but I need to know how that figure is calculated to ensure that there isn't a TurboTax error about it. It is curiously difficult to determine how the QBI is calculated, the 8995 instructions are some of the most complex I've ever tried to read. And searching for either the initials or the words gives me REAMS of stuff about the QBI deduction, which is, of course, not what I want to know about.

VolvoGirl

One thing I found was my QBI credit was not as much as I thought it would be. Because I had a business loss the prior year and it carried it over and took it into account.

Section 199A Deduction

The IRS released the Final Regulations that clarified that

(1) the 1/2 SE tax deduction,

(2) Self Employed Health Insurance deduction, and

(3) employer retirement contributions

need to be subtracted from your business profit to determine "Qualified Business Income" (QBI) for the 20% deduction.

VolvoGirlAnswer

Ok I came up with the same amount.

Schedule C income is 29,213

the SE tax on that is 4127.66

1/2 the self employment tax is 2,063.83.

So income - 1/2 SE tax is 27,149 (29,213-2,064)

R

ralphcookAuthor

(sigh) I had entered 29231 instead of 29213 on the spreadsheet I was using to explore this, and so the difference was not quite satisfied by half the SE tax. I wonder if I'm supposed to be able to deduct anything for the medicare supplement I pay for?

Thanks to all who responded.

In case anyone is interested, I eventually got a TTax support person on the phone who was puzzled; this answer came in and straightened me out before she had to escalate it. But I had a person on the phone, who called me back, within a half hour of calling them, not bad at this time of year for TTax people.