Question

Henry, a freelance driver, finds passengers using various platforms such as Uber and Grubhub. He is single and has no other sources of income. In 2018, Henry's net income from driving is $137,800. Assume Henry takes the standard deduction of $12,000.

Click here to access the 2018 individual tax rate schedule to use for this problem.

Compute Henry's QBI deduction and his tax liability.

Answer 1

According to the question henry is a freelance driver and has no other income other than uber and grubhub,but to claim QBI deduction should not exceed $157500 or $207500 and for married couple $315000 or $415000 as his net income is less than these amounts he can claim deduction upto 20% of net income. So 20% comes out yo be 27560 as it is less than the mentioned amount so he will be claiming deduction only for $12000.so it is his QBI deduction.his tax liability will be zero as per slab rate his taxable income is less which is not covering the slab.