QBI and Specified Service Businesses

[BlueHouse]

I feel like an idiot asking internet to answer a question I should be able to answer myself, but here goes: 

I am an independent contractor, with a business structure as an S-Corp.  (1 employee, me)

Does that mean I'm automatically a specified service business?  I like to think I have special skills and knowledge, but really, anyone could do what I do if they just opened a book and read.  Can any one-person company ever say that their income isn't related to the skill and knowledge of that person? 

My accountant's advice was just to not earn more than $350K this year, but I think he meant $315 and I'm afraid to ask more questions, because then he might say "oh, no, you don't qualify for this at all". 
I'll probably have an AGI of $270 this year.  How will the QBI affect me?  Do I get the discount?  Do I get partial? 

[SeattleCPA]

You don't provide enough info to indicate whether you're going to lose Section 199A deduction due to SSTB status.

If you're married filing joint, though, and calculate a taxable income equal to $315K or less, you will get the deduction.

Say you're single and have a taxable income over $215K, you will lose Section 199A deduction if you're an SSTB like a physician, attorney, accountant, and a bunch of other professions as well.

BTW, you're not a consultant just because you call yourself a consultant. You're a consultant if you get paid for advice.

A contract programmer or software engineer is not a consultant, for example.

P.S. If you're specifically asking whether you fall into the specified service trade or business category because you're a one person business, probably you don't. That category only includes celebrities. See this blog post for details:

https://evergreensmallbusiness.com/pass-thru-entity-deduction-principal-asset/

[BlueHouse]

Thank you SeattleCPA!  That's exactly what I wanted to know and in language that I can finally understand fully.

So it sounds as if I am NOT disqualified by the type of business I'm in (or my skills)

So I am single and will earn over $270K.  Does this mean that the last 20% of that income will be sheltered?  What if I earn over $315K? 

[DS]

Kind of alarming to receive advice to earn only a certain amount and also be afraid to ask questions. You should have someone who you can ask questions, especially if you are paying them!

[BlueHouse]

Kind of alarming to receive advice to earn only a certain amount and also be afraid to ask questions. You should have someone who you can ask questions, especially if you are paying them!

yup, no argument there. 

[wbranch]

Thank you SeattleCPA!  That's exactly what I wanted to know and in language that I can finally understand fully.

So it sounds as if I am NOT disqualified by the type of business I'm in (or my skills)

So I am single and will earn over $270K.  Does this mean that the last 20% of that income will be sheltered?  What if I earn over $315K?

If you are not disqualified as a SSTB and income is >207,500 for single my understanding is that your deduction is going to be limited by 50% of the W2 wages paid to you from your S Corp. So it would depend on the breakdown of your 270k income.

I think that this link from SeattleCPA's blog is a fit for your situation. "Salary Rule #2" mentions a taxpayer may want to increase W2 wages from an S Corp to maximize the deduction.
https://evergreensmallbusiness.com/s-corporation-section-199a-deduction/

[SeattleCPA]

If you are not disqualified as a SSTB and income is >207,500 for single my understanding is that your deduction is going to be limited by 50% of the W2 wages paid to you from your S Corp. So it would depend on the breakdown of your 270k income.

Exactly. E.g, if wages equal $100K so leftover equals $170K, Section 199A equals lesser of 20% of $170K or 50% of W-2 wages.

[BlueHouse]

If you are not disqualified as a SSTB and income is >207,500 for single my understanding is that your deduction is going to be limited by 50% of the W2 wages paid to you from your S Corp. So it would depend on the breakdown of your 270k income.

Exactly. E.g, if wages equal $100K so leftover equals $170K, Section 199A equals lesser of 20% of $170K or 50% of W-2 wages.

I take $153 as W-2 and another $100 or so as K-1.  so it sounds as if I'll ignore 20K of that K-1 income?  So that equates to a little more than $6500 in my pocket? 

[walkwalkwalk]

If you are not disqualified as a SSTB and income is >207,500 for single my understanding is that your deduction is going to be limited by 50% of the W2 wages paid to you from your S Corp. So it would depend on the breakdown of your 270k income.

Exactly. E.g, if wages equal $100K so leftover equals $170K, Section 199A equals lesser of 20% of $170K or 50% of W-2 wages.

I take $153 as W-2 and another $100 or so as K-1.  so it sounds as if I'll ignore 20K of that K-1 income?  So that equates to a little more than $6500 in my pocket? 

No, 50% of $153,000 is 76,500 and 20% of 100k is 20k, so it would not be limited. So 35% of 20k is 7,000. Not much different than what you said, but every little bit helps.