QBI confusion

[katsiki]

When I was finishing up my tax return in FreeTaxUsa, it prompted me to "fix" QBI.  The alert looked like this:

Federal Tax Return Alerts

  Double Check Qualified Business Income (QBI)
    The following deductions we've calculated on your return reduce the qualified business income of a trade or business:
        Self-Employment Tax Deduction: $28
        Self-Employed SEP Deduction: $300
        Self-Employed Health Insurance Deduction: $0
    You didn't allocate an amount of these deductions for these trades or businesses:
        CONSULTING CONSULTING
    Please go back to the Qualified Business Income Deduction screen and enter the amount of QBI Reduction for Other Business Deductions that belongs to your trade or business.


I found this section and attempted to address it.  I was a bit confused and am hoping someone can help me...  It said to enter this total attributed to the business as a negative number.  Do I simply total the 3 numbers above?  $328 ? 

Also, it said to enter it as a negative number.  When I did so, it increased what I owed on the Federal return slightly.

Am I doing this completely wrong?  :)

It is a small change to the tax owed, so I am not extremely worried.

Thanks for any help!

[feelingroovy]

I used FreeTaxUSA too and also found this confusing at first. But yes, you did it right.

[terran]

It sounds like you did it right. As it turns out those things can't be counted in the QBI deduction, so what they prompted you to do is reduce your QBI deduction by that amount, which would increase the amount you owe, so that makes sense.

[katsiki]

Thanks for the replies!

@terran's reply makes a lot more sense than their help file :)

[SeattleCPA]

It sounds like you did it right. As it turns out those things can't be counted in the QBI deduction, so what they prompted you to do is reduce your QBI deduction by that amount, which would increase the amount you owe, so that makes sense.

+1

The regulations say one adjusts the qualified business income for "deductions attributable to a trade or business" and then say something is attributable if someone's income from a trade or business is "taken into account in calculating the deduction."

Probably you're not interested in more granular details...Terran provides a crisp, concise answer above. But here's a longer, drawn out discussion of the law:

https://evergreensmallbusiness.com/section-199a-qualified-business-income-adjustments/

[katsiki]

Thanks @SeattleCPA as well!  Since QBI is new, maybe the help files will get better in time.  :)