Huy is single, age 40, and operates a sole proprietorship.
In 2020, Huy's sole proprietorship generated income of $200,000, and the deductible business expenses totaled $120,000, for a net profit of $80,000. Huy also had other gross income of $40,000. Huy's QBI is $74,348, and his modified taxable income is $101,948.
Huy's self-employment tax liability is $11,304.
Huy takes the standard deduction as his itemized deductions total only $1,000.
What is Huy's 2020 taxable income?
Extracted text: Which of the following is most accurate? The QBI deduction is a tax credit, and Huy does not qualify because it only applies to C corporations The QBI deduction is taken before calculating AGI, símilar to an adjustment In addítion to paying federal income tax on his taxable income, Huy must pay self- employment taxes The QBI deduction is included in gross income The QBI deduction is an itemized deduction; Huy would only utilize the QBI deduction if he doesn't take the standard deduction