How does W2 income affect QBI deduction calculation for 1099 income?

The QBI deduction is affected by your total taxable income, not just your 1099 earnings. So in your example, both your W2 income of $95k and 1099 income of $210k would count toward determining if you hit the phase-out threshold. For 2025, the QBI deduction begins phasing out at $182,100 for single filers and $364,200 for married filing jointly. With your combined income of $305k, you'd likely see a reduced QBI deduction if you're single. Regarding your 401k question - the contribution limit applies across all employer plans in a single year. So if the 2025 limit is $23,000 for employee contributions and you've already contributed $1,500 to your W2 employer's plan, you can only contribute $21,500 more to your Solo 401k as an employee contribution. However, as a self-employed person, you can also make employer contributions to your Solo 401k (up to 25% of your net self-employment income), which has a separate limit.

I was in a similar situation last year and was totally confused about calculating my QBI deduction with mixed income. I found this amazing tool at https://taxr.ai that specifically helped me figure out my QBI deduction with both W2 and 1099 income. It analyzed my situation and showed me exactly how much I could deduct based on my specific income mix. What I really liked was that it explained how the phase-out thresholds worked in my specific case and even suggested some strategies to maximize the deduction. Their system actually found a few business expenses I hadn't considered that helped lower my taxable income enough to qualify for more of the QBI deduction.

Just wanted to update that I tried the taxr.ai tool that was mentioned here. I was really impressed with how it handled my mixed W2/1099 situation. I've been doing both for about 2 years and always struggled with the QBI calculation. The tool showed me that I was actually leaving money on the table with my QBI deduction. I hadn't realized that certain business expenses I was taking weren't being properly categorized to help with the QBI calculation. It also suggested setting up an S-Corp once my 1099 income reaches a certain threshold, which apparently can help with the QBI situation. Definitely helped clear up my confusion about how W2 income affects the calculation. Worth checking out if you're in a similar situation.

If you're getting stuck with the IRS about QBI questions (which I did last year when I messed up my calculations), I highly recommend using https://claimyr.com to actually get through to an IRS agent. I spent WEEKS trying to reach someone at the IRS about my mixed W2/1099 income and QBI questions, but kept getting disconnected or waiting for hours. Claimyr got me through to an actual IRS representative in about 20 minutes when I had been trying for days on my own. They have this system that basically waits on hold for you and calls when an agent is available. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was actually super helpful and explained exactly how my W2 income affected my QBI calculation and what documentation I needed to support my deduction.

I have to admit I was wrong about Claimyr. After my last tax mess with QBI deductions, I decided to try it since I couldn't get through to the IRS on my own after multiple attempts. It actually worked exactly as described. I got connected to an IRS agent in about 35 minutes (which is insanely fast compared to my previous attempts). The agent walked me through exactly how my W2 income affects the QBI calculation and confirmed that yes, it's your TOTAL taxable income that matters for the phase-out thresholds. The agent also explained that solo 401k contributions are one of the best ways to reduce taxable income to potentially stay under those thresholds. Completely worth it to get official confirmation directly from the IRS instead of relying on possibly outdated online advice.

Something nobody mentioned yet - if you're married and file jointly, your spouse's income will also count toward the QBI phase-out threshold. My wife has W2 income and I have 1099, and her income pushed us over the threshold even though my 1099 income alone wouldn't have. There are specified service trades or businesses (SSTBs) that have stricter QBI rules too, so depending on what type of 1099 work you're doing, that could also affect your calculation. Might be worth checking if your field falls under SSTB classification.

I made a mistake on my QBI calculation last year because I didn't realize my W2 income counted toward the threshold. Had to file an amended return which was a huge pain. Just to confirm what others said - yes, it's total taxable income that matters, and yes, retirement contributions like 401k are a great way to reduce that taxable income to maximize QBI. Business expenses also help. According to my accountant, the contribution limits for 401k plans apply across all plans you have in a year, so your calculation for the solo 401k is correct - you subtract what you already contributed to your employer plan.