Exercise $2-21($Algorithmic$)($LO$.3,4)$

In $2022,$ 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 $2022,$ Henry's qualified business income from driving is $$107,200.$ Assume Henry takes the standard deduction of $$12,950.$

Click here to access the $2022$ 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 $2022.$

QBI deduction: $

Tax liability $($round to the nearest cent$)$: $

$12,205$

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In determining QBI, all deductions attributable to a trade or business are taken into account. As a result, a taxpayer must reduce QBI by the selfemployment tax deduction $[164($f$)],$ the self$-$employed health insurance deduction $],$ and any deduction for contributions to qualified retirement plans $[5404].$

b$.$ Complete Henry's $2022$ Form $8995($Qualified Business Income Deduction Simplified Computation$).$ Enter all amounts as positive numbers.

Form $8995$

Department of the Treasury

Internal Revenue Service

Name$($s$)$ shown on return

Henry Jones

Qualified Business Income Deduction Simplified Computation

Attach to your tax return.

OMB No$.1545-2294$

$2022$

Attachment

Sequence No$.55$

Note: You can claim the qualified business income deduction only if you have qualified business income from a qualified trade or business, real

b$.$ Complete Henry's $2022$ Form $8995($Qualified Business Income Deduction Simplified Computation$).$ Enter all amounts as positive numbers.

Form $8995$

Department of the Treasury

Internal Revenue Service

Name$($s$)$ shown on return

Qualified Business Income Deduction Simplified Computation

Attach to your tax return.

Go to

www$.$irs.gov$/$Form$8995$ for instructions and the latest information.

OMB NO$.1545-2294$

$2022$

Attachment

Sequence No$.55$

Your taxpayer identification number $123-45-6789$

Note: You can claim the qualified business income deduction only if you have qualified business income from a qualified trade or business, real estate investment trust dividends, publicly traded partnership income, or a domestic production activities deduction passed through from an agricultural or horticultural cooperative. See instructions.

Use this form if your taxable income, before your qualified business income deduction, is at or below $$170,050($ $$340,100$ if married filing jointly$),$ and you aren't a patron of an agricultural or horticultural cooperative.

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