QBI deduction

canaguerre — Wed, 11 Feb 2026 04:43:45 GMT

I retired from my organization in 2022 and continued working for the same organization in 2023 as a consultant. I received a 1099 NEC from the organization for 2023 and I don't know if I can claim the QBI deduction based on the fact that I'm consulting for the same organization I used to work for.

Re: QBI deduction

DoninGA — Fri, 02 Feb 2024 16:08:07 GMT

You are an independent contractor with your own business and entering your income and expenses on a Schedule C. You are eligible for the QBI regardless if your current client is a former employer.

Re: QBI deduction

Mike9241 — Fri, 02 Feb 2024 17:58:37 GMT

It is not clear whether you can take the QBI (199A) deduction

IRS REG 1.199A-5(d)(3)

(i)Presumption. Solely for purposes of section 199A(d)(1)(B) and paragraph (d)(1) of this section, an individual that was properly treated as an employee for Federal employment tax purposes by the person to which he or she provided services and who is subsequently treated as other than an employee by such person with regard to the provision of substantially the same services directly or indirectly to the person (or a related person), is presumed, for three years after ceasing to be treated as an employee for Federal employment tax purposes, to be in the trade or business of performing services as an employee with regard to such services. As provided in paragraph (d)(3)(ii) of this section, this presumption may be rebutted upon a showing by the individual that, under Federal tax law, regulations, and principles (including common-law employee classification rules), the individual is performing services in a capacity other than as an employee. This presumption applies regardless of whether the individual provides services directly or indirectly through an entity or entities.

(ii) Rebuttal of presumption. Upon notice from the IRS, an individual rebuts the presumption in paragraph (d)(3)(i) of this section by providing records, such as contracts or partnership agreements, that provide sufficient evidence to corroborate the individual's status as a non-employee. Presumption. Solely for purposes of section 199A(d)(1)(B) and paragraph (d)(1) of this section, an individual that was properly treated as an employee for Federal employment tax purposes by the person to which he or she provided services and who is subsequently treated as other than an employee by such person with regard to the provision of substantially the same services directly or indirectly to the person (or a related person), is presumed, for three years after ceasing to be treated as an employee for Federal employment tax purposes, to be in the trade or business of performing services as an employee with regard to such services. As provided in paragraph (d)(3)(ii) of this section, this presumption may be rebutted upon a showing by the individual that, under Federal tax law, regulations, and principles (including common-law employee classification rules), the individual is performing services in a capacity other than as an employee. This presumption applies regardless of whether the individual provides services directly or indirectly through an entity or entities.

(ii) Rebuttal of presumption. Upon notice from the IRS, an individual rebuts the presumption in paragraph (d)(3)(i) of this section by providing records, such as contracts or partnership agreements, that provide sufficient evidence to corroborate the individual's status as a non-employee.

Re: QBI deduction

canaguerre — Fri, 02 Feb 2024 20:11:53 GMT

Thank you for your answer, Mike. Does this mean that after 3 years, if I continue working at this organization as a consultant, I can claim the QBI deduction?

Re: QBI deduction

AnnetteB6 — Sun, 04 Feb 2024 21:44:26 GMT

Yes. The key difference is if your work as a consultant is substantially the same as your work had been as an employee. If it is the same, then after three years you would be eligible to claim the Qualified Business Deduction (QBI).

If you are performing a different function as a consultant, then you are eligible to claim the QBI deduction now. In this case though you would need documentation to back this up.

@canaguerre

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