How is QBI determined?
The 20 percent QBI deduction is based on qualifying business income from a sole proprietorship, partnership, S corporation, trust or estate, farm, and certain rental property. The amount of the deduction can be further limited if the taxpayer’s income exceeds the inflation-adjusted threshold established for that tax year.
While normally figured on Form 1040, the IRS has two forms to help taxpayers calculate QBI:
- Form 8995, Qualified Business Income Deduction Simplified Computation
- Form 8995-A, Qualified Business Income Deduction
The instructions for Forms 8995 and 8995-A explain who can claim the deduction, how to determine qualifying businesses and income, specific exclusions, and more.
Return to Taxing Subjects Frequently Asked Questions.
- What is the Qualified Business Income Deduction?
- What types of business income qualify for the QBI deduction?
- What is a specified service trade or business?
- What is the taxable income QBI threshold for 2020?
- What is the taxable income QBI threshold for 2019?
- What is the taxable income QBI threshold for 2018?
- What is the QBI rental real estate safe harbor rule?
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