Why is my Qualified Business Income deduction not changing my taxes due?

[kendukelaw]

Why is my Qualified Business Income deduction not changing my taxes due?  TurboTax congratulated me for qualifying for the Qualified Business Income deduction, but it had no effect on my bottom-line tax bill.

[DavidS127 · Accepted solution]

The small business tax deduction, also known as the qualified business income or QBI deduction, shows up as a credit on Line 10 of Form 1040. If Line 10 does not have an amount, your QBI source (e.g., Schedule C, Schedule K-1, or Schedule E) may not have net income for the year.  You can qualify for the QBI deduction, but if you have a loss you don't get a deduction in the current year.

Check Line 10 on your Form 1040 in TurboTax using these steps:

1.    Click the dropdown arrow nest to Tax Tools (on the left pane)

2.    Click Tools (just below Tax Tools on left pane)

3.    In the pop-up window click View Tax Summary

4.    On the left pane click Preview my 1040 to review your Form 1040, Line 10

To return to the TurboTax interview questions, click "Back" on the left pane.

If that doesn't resolve your question, you can open a PDF of your tax return with the worksheets, and find Form 8995/8995-A, the QBI Component worksheet, and the Section 199A Smart Worksheet on the source form for your QBI (Schedule C, Schedule K-1, Schedule E).  You should be able to "walk" your QBI calculation from the source form, to the QBI Component worksheet, to the Form 8995/8995-A.

Here's how to find the PDF of your current year tax return:

1. If you're not already in your return, sign in and open or continue your return.
2. Select the dropdown arrow next to Tax Tools and then Print Center from the left menu.
3. Select the first option, Print, save, or preview this year's return and follow any additional instructions.  You'll want the version with the worksheets.
4. If you haven't paid your TurboTax fees yet, you'll have to do so to create the PDF.

[kendukelaw]

Dear David, 

Thanks for the answer. It was very helpful.  I found out that line 10 did, in fact, include the QBI deduction.  The problem was how TurboTax informed me of the deduction.  A window popped up at the very end of the federal return process congratulating me for qualifying for a several-thousand-dollar deduction, but nothing changed. I now know that this is because Turbo-Tax had already computed in the deduction several steps earlier.  If you have any influence with the Tubo-Tax folks, please suggest to them that they inform users of the deduction in a way that informs them that the amount due has been calculated with the QBI deduction already factored in. 

Thanks again!!          

[Critter]

My personal opinion is that the Refund-O-Meter should be hidden until the return is completed ... it only confuses users when calculations are done behind the scenes and the explanation comes after the fact.  All users must understand that the meter is only correct when all information has been entered and they must review the actual return to review for accuracy before they file. 

[Carl]

the Refund-O-Meter should be hidden

I agree. Especially when folks enter deductible expenses that for various and valid reasons makes their refund go "DOWN".  I see this most often when folks are entering rental expenses, and then get confused when they see the refund amount go down.

Basically, I tell folks that number is absolutely useless and meaningless until they have completed their return in it's entirety and they're ready to file.