My qualified business income deduction is significantly lower than Schedule C income. Why?

[zanussi]

I have a simple Schedule C writing business with very low deductions and a business income of approximately $150,000. My husband does not have any Schedule C income of his own and our total earnings are under $200K. But my qualified business income deduction is based on only $111,000 of QBI. We don't have any other significant income or deductions...what could be going on? Shouldn't it be the same as my Schedule C bottom-line income?

[FangxiaL]

Here is how QBI deduction 2021 is calculated:

The qualified business income deduction (QBI) is a tax deduction that allows eligible self-employed and small-business owners to deduct up to 20% of their qualified business income on their taxes. In general, total taxable income in 2021 must be under $164,900 for single filers or $329,800 for joint filers to qualify.

[Mike9241 · Accepted solution]

schedule C income is also reduced by 1/2 the SE tax and by any contribution to a retirement plan.

there can be other limitations if your business is a specified service, trade or business. see form 8995 where the QBI deduction is calculated.

[zanussi]

Ah, thank you! That makes sense. Very helpful!