Exercise 15-21 (LO. 3, 4)

In 2020, Henry Jones (Social Security number 123-45-6789) works as a freelance driver, finding customers using various platforms like Uber and Grubhub. He is single and has no other sources of income. In 2020, Henry's qualified business income from driving is $61,200. Assume Henry takes the standard deduction of $12,400.

Click here to access the 2020 individual tax rate schedule to use for this problem.

Assume the QBI amount is net of the self-employment tax deduction.

a. Compute Henry's QBI deduction and his tax liability for 2020.

QBI deduction: $fill in the blank afb610fe9feef96_1 Tax liability (round to the nearest dollar): $fill in the blank afb610fe9feef96_2

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In determining QBI, all deductions attributable to a trade or business are taken into account. As a result, a taxpayer must reduce QBI by the self-employment tax deduction [ 164(f)], the self-employed health insurance deduction [ 162(l)], and any deduction for contributions to qualified retirement plans [ 404].

b. Complete Henry's 2020 Form 8995 (Qualified Business Income Deduction Simplified Computation). Enter all amounts as positive numbers.