TurboTax makes the determination as to whether your self-employment qualifies for the QBI deduction based on your answers to the questions in the Schedule C section. You can revisit Schedule C and go over the the questions that appear after the initial income and deduction entries.
A qualified trade or business is any section 162 trade or business, with three exceptions:
- A trade or business conducted by a C corporation.
- The trade or business of performing services as an employee.
- For taxpayers with taxable income that exceeds the threshold amount, specified service trades or businesses (SSTBs).
Please see this help article, this IRS FAQ page, and this IRS webpage for more information.
Depending on your income, the deduction may be limited if your activity is considered a Specified Service Trade or Business (SSTB). The specified service trade or business (SSTB) classification doesn’t come into play as long as total taxable income is under $191,950 ($383,900 if filing jointly). At higher income levels, the deduction for SSTBs is reduced and in some cases, eliminated.
You can also search for the QBI Flow Chart in the Instructions for Form 8995 and follow the steps to help determine whether the income qualifies for the Qualified Business Income Deduction.
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