My QBI seems off

[flambee]

TT tells me I have a QBI deduction of $84 which seems low to me given that I have about $9,940.00 in self-employment income (I am a photographer). I do not have any K-1s. My capital gains are $10,929 this year. What am I missing?

[Vanessa A]

Do you also have expenses? What other deductions did you take?  What other income do you have?  Just the capital gains or do you have W-2 income? 

You do not get the 20% off of the total income.  You get it off of a your taxable business income. Then it is the lesser of 20% of your QBI or 20% of taxable income minus net capital gains. 

QBI is calculated as follows:

Reported income-

expenses-

50% of your SE taxes-

Self Employed Health Insurance-

Retirement contributions.  

Note: There can be other deductions as well, but these are the most common. It can also be limited by taxable income limits which would include W-2 income and capital gains.  

Example.  You have $11,000 in income from self employment.  $1,000 in expense.  $1,530 in Self Employment Taxes.  Your QBI would be calculated as follows:

$11,000

-$1,000

=$10,000

-(1,530/2)

=$9,235

QBI tentative deduction= 20% x $9,235= $1,847

What's the Qualified Business Income (QBI) deduction?

If your total QBI is $84, this could also be limited by your taxable income minus your capital gains.  If your total income is $11,349 on line 15 of your 1040, and you subtracted your capital gains, then your QBI would be limited to the lessor amount which would be 20% of $420 instead of the tentative QBI.