Not Understanding the QBI section

[Bubblena]

Hi there. I am doing my Self employment area on my home and business turbotax, and I got to the QBI part, For one, I am just not understand it, I am a hairstylist, so I am not sure what counts, and at the bottom, it says it should be a positive number, but on the net income is a negative number and so I do not know what to do with the Not Included in QBI area(s). I have tried to watch videos and nothing is helping me make sense of this so I can do it right. Any and all help would be appreciated. even a step by step on how I can figure mine out. Thanks in advance.

[DianeC958]

Qualified Business Income is a deduction that is currently allowed for all businesses that you actively participate in as long as the overall income on your tax return does not exceed $157,500 of you are filing as Single or $315,000 if your are filing as Married Filing Joint.

Since you are a hairstylist and you actively work your business you qualify for the deduction.  If you have a loss for 2019 and claim the Qualified Business Income the 20% amount of the loss would then carry over to 2020.  If you have income in 2020 then the 20% Qualified Business Deduction for 2020 would be reduced by the 20% Qualified Business Deduction loss for 2019.

For example 2019 you have a loss of $10,000 so your QBI is a negative $2,000 then in 2020 you have a $10,000 profit, your QBI deduction  is a positive $2,000 the two amounts offset each other and equal zero. So for 2020 you would not have a QBI deduction on your tax return.

You cannot go back and forth on the election for QBI.  If you pick to claim the deduction then you are required to claim each year whether you have income or a loss.

[AHNEZ]

Hello, I have a lost QBI from 2019 and 0 income in 2020 from that business.  Can I carry the loss from 2019 to my personal of 2020 income.  I stopped my business in Jan 2020 and worked for someone else in 2020.

Thank you

[DianeW777]

No, you cannot use that loss against personal income.  You can carry it forward to offset any future qualified business income (QBI) for a business or investment K-1 profit or positive qualified business income (QBI).

To include your QBID carryforward loss so that it is not lost you can use the steps below.

• TurboTax CD/Download or TurboTax Online
  • Business Income and Expenses > Less Common Business Situations > Net Operating Loss/QBI Carryforward Loss
  • Under Income and Expenses > Other Business Situations > Net Operating Loss/QBI Carryforward Loss

[jgrayhiggins]

In 2020 i had a QBI Loss Carryforward of -8,811.    On my 2021 8995 form, Turbotax is adding this loss carryforward (-8,811) to my QBI income (11,783).    Per the response above and the 199A loss rules..  only 20% of the 8,811 QBI Loss Carryforward from 2020 should be deducted from the 11,783.  Turbo tax is deducting the -8,811 loss from 11,783.  

Is there a bug in TT or do I need to manually calculate the .20 of -8,811?

[JamesG1]

QBI carryforward losses are matched dollar for dollar against current QBI income.

IRS form 8995 instructions states:

Schedule C (Form 8995-A) offsets your trade or business that generated a qualified business loss against the QBI from your other trades or businesses.  The qualified business loss must be apportioned among all your trades or businesses with QBI in proportion to their QBI.

QBI carryforward losses are deducted from the current QBI income.  20% of that result is generally the Qualified business income deduction.