Question

In 2019, 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 2019, Henry's qualified business income from driving is $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. a. Compute Henry's QBI deduction and his tax liability for 2019. QBI deduction: $fill in the blank 3d3cdcfa0fe106c_1 Tax liability (round to the nearest dollar): $fill in the blank 3d3cdcfa0fe106c_2 b. Complete Henry's 2019 Form 8995 (Qualified Business Income Deduction Simplified Computation). Enter all amounts as positive numbers.

Answer 1

Answer:

Answer is explained in the explanation section below.

Explanation:

Note: This question is incomplete and lacks necessary data to solve. However, I have found that missing data on the internet and will be using that data to solve this question.

Solution:

Data Given:

Net Income = $61,200

Standard Deduction = $12,200

Henry's QBI deduction and his tax liability for 2019.

For Henry's QBI deduction, we have the following formula:

QBI deduction = (Net income - Standard Deduction) x 20%

Where, 20% is the value which is dragged from the 2019 Tax Rate Schedule which is missing here.

So,

Henry's QBI Deduction = ($61,200 -  $12,200  ) x 20%

Henry's QBI Deduction =  $9,800

Now, we need to calculate the tax liability:

For, Tax liability, first we need to complete the part (b) which is to compute the total taxable income.

So,

The Taxable Income = Net income minus Standard Deduction minus QBI Deduction

Taxable income = ($61,200 - $12,200 - $9,800)

Taxable income = $34,200

We need to use this taxable income and tax rate of 12% (fetched from Table) and 9700 (Fetched from the table)

So,

Tax Liability for Henry = $970 + (12% x (39,200 - 9,700))

Tax Liability For Henry = $970 + (12% x (29500))

Tax Liability For Henry = $970 + (3540)

Tax Liability For Henry = $4,510

b) in part b, we have to calculate the total taxable income, that we have already calculated. And since, there is no form, so, I will be completing this problem here.

Taxable income = Net income minus Standard Deduction minus QBI Deduction

Taxable income = ($61,200 - $12,200 - $9,800)

Taxable income = $34,200