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To calculate Nevaeh's qualified business income ( QBI ) deduction, we need to follow these steps: Calculate Nevaeh's QBI: Nevaeh's QBI is equal to her
To calculate Nevaeh's qualified business income QBI deduction, we need to follow these steps:
Calculate Nevaeh's QBI:
Nevaeh's QBI is equal to her net profit from her business since she did not have any other adjustments like employee wages or depreciation Therefore:
QBINetProfittextQBItextNet ProfitQBINetProfit
Determine the QBI Deduction:
The QBI deduction is generally of the QBI, but it can be limited based on taxable income thresholds. Since Nevaeh's joint taxable income is $ we need to check if it exceeds the threshold for the QBI deduction limit
For the tax year, the QBI deduction is subject to certain thresholds:
For married couples filing jointly, the threshold is $ If taxable income exceeds this threshold, certain limitations apply.
Since Nevaeh's taxable income is $ it is below the threshold, and thus, she is eligible for the full QBI deduction of on her QBI.
QBIDeductionQBItextQBI Deductiontimes textQBItimes QBIDeductionQBI
Conclusion
Nevaeh's qualified business income QBI deduction is:
Answer: $
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