Henry, a freelance driver, finds customers using various platforms such as Uber and Grubhub. He is single and has no other sources of income. In 2019, Henry's qualified business income from driving totals $61,200. Assume Henry takes the standard deduction of $12,200.Click here to access the 2019 individual tax rate schedule to use for this problem.Assume the QBI amount is net of the self-employment tax deduction.Compute Henry's QBI deduction and his Federal income tax liability.QBI deduction: $Tax liability (round to the nearest dollar): $

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anijesuajayi anijesuajayi · Answer 1 · 2020-03-04T10:00:07+01:00

Answer:

Henry's QBI is $9,760

Tax liability = $4,510

Explanation:

The question is to determine Henry's QBI deductions as well as his Federal Income Tax Liability

First we determine his MTI = His net income - His standard deduction

= $61,200 - $12,200

= $49,000

QBI(Qualified Busines Income) Deduction

This will represent the lesser of the following

First = 20% of his Net Income = 0.2 x $61,200 = $12,240

Second= 20% of his MTI = 0.2 x $48,800= $9,800

Henry's QBI is $9,800

Tax Liability Computation

Based on the tax rate for individuals in 2019,

His income tax is as follows

= $970 + (12% x ($49,000-$9,800)- $9,700)

= $970 + $3,540

= $4,510