Sharon, today we're going to be talking about qualified business income. QBI. You know, maybe some of our viewers have heard of QBI. Some of you, it might sound like something out of outer space. It is a tax term, and it's, again, another part of the tax code, as we talk about. But it is something that if you do it right, you can definitely benefit from. I love this whole idea about QBI. We talked about this a lot at the leadership assembly, where we did a day-long seminar on becoming a 1099 CRNA. Well, it's something you definitely want to know about, and something can be beneficial for a short period of time, at least for now. So the qualified business income, it basically refers to income from your business, including S-corporations. And you can deduct up to 20% of what you make in the business as profit, in addition to other deductions you might have. This came about in 2018, the Tax Code and Jobs Act. A great benefit. I mean, think about it, Sharon. If your business shows $100,000 in profit, you only have to pay taxes on 80%, which is $80,000 instead. So really big benefit. I mean, if you're in the 30% tax bracket for round numbers, I mean, you made $100,000, that just saved you $3,600 in taxes there. Well, no, actually, I did the math wrong, Sharon. I'm thinking of 20 other things on this. Saved you $6,000 in taxes. It can be a big deal, but there are some caveats. One, it does sunset right now. In 2018, as we talked about before, a lot of these provisions were put in. They couldn't get it passed forever, so they put a sunset provision. And so at the end of 2025 and the start of 2026, QBI is no longer available for it. Unless they put it back in or extend. We'll see. I mean, we don't know what the makeup will be or any of that at this point, but right now we know that we can count on that the tax law is expiring. They could extend it. We'll just have to see what's going on at that time. QBI is really a complicated calculation. We're not going to get into the calculations of QBI. I'm just going to kind of talk through it. This is a section of the code called 199A. And part of this calculation starts with your total taxable income. So we'll get into that in just a minute. The type of business structure can have an impact on QBI and the calculation. So a lot of times when you're picking what type of business entity you want to be, that can play a role into kind of leaning one way or the other, whether you qualify for QBI or how much QBI you get. So there are some reasonings to pick certain business types over others. And then the net income calculated after business expenses. Okay, this is a key. That is where QBI is basically computed. After all your business expenses have been paid, that's where you get the 20% off or some variance thereof. So if you minimize deductions, it can lead to higher QBI. If you maximize deductions, then it can lead to lower QBI. This QBI is a game. It basically works better in some instances by lowering your expenses, and it works better in some instances by increasing your expenses. You've got to stay on top of it. This is where it gets into a little more complication. If you are a specified service, trade, or business, then there are some limitations on QBI, share of which CRNAs would be considered. Professional service businesses, you know, your business, my business, doctors, lawyers, accountants, those are all subjected to these phase-out limits on QBI. And the eligibility, I put it up here for married, filing joint, and individual. So for married, filing joint, the phase-out starts at $383,900 and goes up to $483,900. So at $383,899 in income, you qualify for the 20% of QBI. At $483,900, you get zero QBI, and it can vary in between going down to zero. For individuals, $191,950 to $241,950, same thing. This comes back to the majority of our CRNAs are making more money than this, right? Take a single CRNA, I mean, you know, some of them are grossing close to $400,000. So now in order to qualify them for QBI, what do we need to do? We need more deductions, right? Maybe, as we've talked about in another section, maybe that section 179 might make sense, or accelerated depreciation on the purchase of a business automobile, because then we lower that amount. Maybe we want to increase their retirement savings contributions because it lowers that amount. I mean, this is a big deduction, you know, and again, it's a limited time period that we've got QBI right now. So as I might've heard you say before, you gotta make hay before the sun shines. You gotta squeeze that juice out of that lemon. Don't drink it all because you make a really sour face. So these income limitations, you know, apply to CRNAs. So if you're in another occupation that's not subjected to SSTB, specified service trade or business, then you could make $2 million and still get the 20% deduction. So depending upon, you know, there's a lot of business owners out there that are still qualifying that aren't in specified service trade businesses, making a lot of money, who, you know, in that scenario, their $400,000 is coming off of their income for this. So you can see this can be a very powerful tool from a tax planning perspective. Remember, you have to be a business owner. You cannot be W-2 and use QBI. I get that question a lot. Well, you know, can I use QBI? No, you can't. It's only self-employed individuals that qualify for this. So make sure you understand that as well. QBI lowers your federal tax bill and it can minimize your overall tax bill. Most states except QBI, some have a little different variation on how they process this and do it, but most of them do, which can lower your state income tax bill. So it's not just your federal, you're also lowering your state income tax bill. The more you understand this and how it works and how to calculate it, the greater savings and profit that you can basically keep in your pocket. I mean, this is available, Sharon. I say it all the time. This is, people just need to know about it. You know, CRNAs are smart. You guys can figure this out. There's some CRNAs out there that just don't want to have anything to do with this, want to wash their hands of it. And that's great. You know, that's up to you. Make sure you've got a good tax professional to help you. But if you go in asking about QBI to your tax professional and saying, oh, I know that there's a specified service and trade business. I think I'm one of those. And I know that there's an income limitation that I need to probably lower my income to qualify for this, right? That tax person is going to sit up and take notice. They know they can't snow you now. They know you know enough about it. You might not know everything, but you know enough about it. Ask the question. And that's really the idea here is how can we save you money and make sure that you're qualifying for QBI.

Qualified Business Income

Tax Benefit

S-Corporations

Income Thresholds

Tax Planning