QBI phase-out: single-member LLC with SSTB income $5K above the cliff
Client is a solo consultant (SSTB — consulting), files as SMLLC disregarded for federal. 2025 taxable income lands at $246,950 — roughly $5K above the single-filer phase-out complete cutoff ($241,950 for 2025).
At that income level the SSTB §199A deduction phases out completely. I've run the math twice.
Question: is there anything cleanly defensible i can do to pull taxable income back under the cliff? SEP-IRA is already maxed. HSA contribution done. Legitimate deferred billing to push $5K into 2026? i'm uncomfortable manufacturing the drop but the cliff is brutal.
4 replies
Employer contribution to the Solo 401(k) is the cleanest lever available and entirely statutory. IRC §404(a)(8)(C) deduction timing lets them fund through the extended due date. Not aggressive at all — it's the textbook move.
Also confirm the SEP-IRA isn't actually maxed against §415(c) limits — i've seen cases where "SEP maxed" turned out to be ~18% of net SE earnings because the client used teh wrong denominator.
for context — the client has a Solo 401(k) that's employee-deferral-only so far. they could still make an employer contribution up to 25% of SE earnings before the return is due. that alone more than clears the $5K.
would anyone flag that as aggressive? it's mechanical and documented.
@Rachel yes — §415(c) aggregates across related plans. the Solo 401(k) and SEP are both defined contribution plans maintained by the same controlled group (the SMLLC), so the $70K 2025 cap applies in aggregate, not per plan. common trap.
watching from the UK side but the SEP vs Solo 401(k) overlap bit is interesting — is it correct that if the client contributed to both in the same year you'd run into §415 aggregation issues?
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