


Ask the community...
The QBI calculation in Cash App is notoriously buggy. As a workaround, I manually calculate my QBI using this formula: QBI = Business Income - (Business Expenses + 1/2 Self-Employment Tax + Self-Employed Health Insurance Deduction + SEP/SIMPLE/Qualified Plan Contributions) That's basically your Schedule C profit minus the adjustments that appear on Schedule 1 of Form 1040. Then you have to remember that if your taxable income exceeds $170,050 (single) or $340,100 (married filing jointly), phase-out rules start to apply, especially for service businesses. Once calculated, just manually override whatever Cash App shows and enter your number.
What about the 20% limitation? Isn't QBI supposed to be the lesser of 20% of qualified business income or 20% of taxable income minus capital gains?
You're mixing up the QBI itself with the QBI deduction. The QBI is just your qualified business income figure - essentially your business profit with certain adjustments. The QBI deduction is generally 20% of your QBI, but is subject to limitations based on your overall taxable income, whether you're in a specified service business, and W-2 wages/business property factors. Cash App should calculate the actual deduction correctly once you give it the right QBI figure.
Has anyone tried contacting Cash App support about this? I'm having the same QBI calculation issue and wondering if they're aware of the bug where it doesn't update when expenses change.
I contacted them last month about this exact issue. They acknowledged it's a known bug but didn't have an immediate fix. Their suggestion was to completely finish entering all your income and expenses first, then go back to the QBI section last. Apparently, sometimes it will recalculate correctly if you do it in that order. If not, they suggested calculating QBI manually and overriding their number.
5 Something important that hasn't been mentioned yet - if you're considering an Offer in Compromise, be aware that there's a 5-year compliance requirement after acceptance. This means you have to file all required tax returns and pay all required taxes for 5 years after your offer is accepted. If you don't, the IRS can revoke the agreement and reinstate the original debt. Also, the OIC process will extend the collection statute of limitations, which is normally 10 years. Make sure you understand all the implications before proceeding.
1 Does the 5-year compliance thing mean I can't have ANY issues with taxes for 5 years? What if I file on time but can't pay everything that year? Would they bring back all my old debt too??
5 The compliance requirement means you need to file all required returns on time and pay any new tax obligations when they're due. If you can't pay a new tax bill in full, you need to work with the IRS immediately on a payment arrangement. If you violate the terms, then yes, the IRS can potentially revoke your OIC and reinstate the original tax debt, minus whatever payments you've made. They don't do this for minor issues, but it's a serious consideration - you're essentially promising to be a model taxpayer for those 5 years.
12 Has anyone tried those "tax relief" companies that advertise on TV? They claim they can settle tax debt for pennies on the dollar, but I've heard mixed things.
19 I used one of those companies and it was a complete waste of money. Paid them $4,000 up front and all they did was put me on an installment plan I could have set up myself for free on the IRS website. They promised they'd get me an OIC but after taking my money they said I "didn't qualify" - something they should have known from the beginning.
12 Wow thanks for the warning! Sounds like these companies are just preying on desperate people. I'll steer clear and either try to handle it myself or find a reputable local tax professional instead.
Just wanted to add - if you're close to the $2,500 threshold, consider if you had ANY other income you might have forgotten about. Did you sell anything online? Do any gig work? Even small amounts of additional earned income could push you over. Also, if you're married filing separately, have you considered whether filing jointly would be more beneficial? Sometimes the combined credits and deductions work out better even with separate finances.
I didn't think about checking for other income! I did some babysitting for my neighbor a few times that probably paid about $350-400 total. They didn't give me any tax forms but I guess I should still report that? Would that count toward the $2,500? Also we definitely can't file jointly this year due to some complicated financial stuff with my husband's business. We've already worked out who's claiming which kid, just trying to figure out if I should stick with claiming my daughter or let her dad take her this year.
Yes, that babysitting income absolutely counts toward the earned income threshold! You should report it as self-employment income on Schedule C, even without formal paperwork. That additional $350-400 would put you over the $2,500 threshold and likely qualify you for the refundable portion of the Child Tax Credit. If filing jointly isn't an option due to your husband's business situation, then adding this self-employment income could be your best solution. In that case, you should definitely claim your daughter as planned since you'd now qualify for the benefits. Don't give up your year in the rotation with her father unless absolutely necessary.
Something nobody mentioned - if you're close to the threshold, making a retirement contribution might NOT help because the $2,500 is based on EARNED income, not adjusted gross income. Contributing to an IRA reduces your AGI but not your earned income. This tripped me up last year - I contributed to an IRA thinking it would help my tax situation but it didn't change my eligibility for the refundable child tax credit at all.
This is super important! The child tax credit threshold is based on earned income while many other tax benefits are based on AGI. The tax code is so confusing sometimes.
I ran into this exact same issue with our company's Silverado 3500 lease last year. The key is to understand that you don't actually depreciate leased vehicles - you simply deduct the business percentage of the lease payments as ordinary business expenses. The reason TaxAct is asking about depreciation for the heavier truck is likely because the software is detecting it as a potential Section 179 vehicle based on weight, but isn't properly recognizing that leased vehicles don't qualify for Section 179 deduction or depreciation. For heavy vehicles used for business (over 6,000 lbs GVWR), you may have to calculate what's called an "inclusion amount" which slightly reduces your deduction - it's the IRS's way of adjusting for the benefit of leasing an expensive vehicle. But this is normally a very small amount compared to your lease payments.
Thank you so much for this explanation! So basically I should just bypass the depreciation question in TaxAct somehow? Would selecting "straight line" be the safest if I have to choose something, or should I go back and re-enter it differently to avoid that question entirely? The truck is 100% business use if that matters for the inclusion amount you mentioned.
If TaxAct won't let you proceed without selecting a depreciation method, I'd recommend going back and re-entering the vehicle information but categorize it as a leased vehicle expense rather than an asset to be depreciated. Most tax software has a specific section for business vehicle expenses where you can indicate it's leased rather than owned. If you absolutely have to choose a depreciation method as a workaround, straight-line would be the most conservative choice, but it's not technically correct since you don't depreciate leased assets. The 100% business use is great - it means you can deduct 100% of the lease payments (minus any inclusion amount). The inclusion amount is based on the fair market value of the vehicle and lease term - for a 3-year lease on a heavy vehicle, it's often minimal.
The GMC Sierra 2500 HD actually gets a special tax advantage because it's over 6,000 lbs GVWR. It qualifies as a "heavy SUV" for tax purposes even though it's a truck. But here's the confusing part everyone else missed - for LEASED vehicles, the rules are different than purchased. You don't take depreciation on leased vehicles! Instead, you deduct the lease payments as a business expense (assuming 100% business use). The reason TaxAct is asking about depreciation is because it's probably confused by the weight classification. I'd recommend skipping that screen or calling TaxAct support about how to properly enter a leased heavy vehicle without depreciation options. Btw - one thing to watch for: if the truck has a fair market value over a certain threshold (around $51,000), you may need to calculate an "inclusion amount" that reduces your deduction slightly.
Lucas Turner
I'm an accountant and see this confusion all the time with amended returns. The general rule is to include: 1. Form 1040X (obviously) 2. Any schedules or forms where the numbers actually changed 3. Any new forms you didn't include in your original return but now need to For the 2020 UCE specifically, you definitely need Schedule 1 showing the unemployment exclusion. Your Schedule D likely doesn't need to be included unless the capital gain calculations themselves changed (rare for UCE). Don't overthink it - the IRS has your original return. They just need to see what's different now.
0 coins
Kai Rivera
β’Would I need to include a corrected Form 8995 if my QBI deduction changed because of the lower AGI from the unemployment exclusion?
0 coins
Lucas Turner
β’Yes, absolutely include the corrected Form 8995. If your QBI deduction amount changed due to the lower AGI from the unemployment exclusion, that's exactly the type of form you need to include with your 1040X. The key principle is to include any form where the numbers are different from what you originally filed. Since the QBI calculation is affected by AGI thresholds, the UCE could definitely impact those calculations.
0 coins
Anna Stewart
Has anyone actually received their UCE refund yet? I filed my 1040X back in May and still haven't heard anything!
0 coins
Layla Sanders
β’I filed in April and got my refund last week. I did include a note explaining it was for the 2020 UCE and highlighted the unemployment line on Schedule 1. Maybe that helped speed things up?
0 coins