Why is my QBI deduction so low compared to 20% of my business net income?

wrwbear · ‎February 12, 2021

The QBI calculated by TT is only $236. Yet, my total taxable income (MFJ) is $100,534 and my schedule C business net income is $10,372. Reviewing the QBI Form 8995 worksheet from IRS, I would seem to qualify for 20% of the $10,372, give or take other minor subtractions from net income. So, I think QBI deduction should be around $2,000 not $236.

All of my gross income is coming from a Form 1099-NEC. Should my customer have used 1099-MISC instead? Perhaps that might be the problem?

Thanks.

ColeenD3 · ‎February 13, 2021

No, your income was correctly reported on Form 1099-NEC.

The 20% QBI deduction calculation compares the difference between 20% of the QBI (your Schedule C net income, minus any other deductions attributable to your Schedule C income, which encompasses deductions such as the solo 401K deduction, Self-Employed Health Insurance Deduction attributable to the business, and 1/2 of SE tax being deducted on your return) and 20% of your taxable income.

wrwbear · ‎February 13, 2021

Thanks. I think I see it now. I was going by the Schedule C net income and didn't understand that this figure would be further reduced by the self-employed health insurance deduction, which really shows up on another line in the 1040.

Why is my QBI deduction so low compared to 20% of my business net income?

Deductions & credits

Deductions & credits