The QBI deduction aka Qualified Business Income Deduction is a 20% deduction from net trade or business income. Rental Properties may qualify for the QBI deduction if the property is considered business rather than passive income.
The deduction is not considered when calculating Self-employed taxes. The 20% deduction is taken off of your net business income before regular Income tax liability is calculated.
If you qualify for the QBI deduction, you will received the 20% deduction. If your net Self-employed income is $20000, you will get a deduction of $4000 before you pay Income taxes.
Example without QBI: Income include $20000 from W2 and $12,000 Self-Employed.
Total taxable income before QBI deduction $32,000
Example with QBI:
Income include $20000 from W2 and $12,000 Self-Employed.
Minus $3000 for the 20% QBI deduction.
Total taxable income with QBI $29,000
Additional Info on QBI below:
https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-cuts-jobs-act/qualified-business-inc...
https://blog.turbotax.intuit.com/taxes-101/qbi-deduction-83650/
