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QBI Deduction for first time as church musician side work

Hi!

I am paid to play music at my church and received a 1099-NEC, instead of the 1099-MISC as in prior years. I noticed I am being prompted to go through more questions for the schedule C this year and it is giving me the QBI deduction. I was paid $3K in 2023 as part of the musician side gig. 

I don't mind the extra deduction but want to make sure I don't get the IRS on me over $500. This would be the first year it is prompting me to take advantage of this, I have had this same income for the previous 2 years. Not sure if it is due to this being the first year our household moved out of the standard deduction range. 

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5 Replies
KrisD15
Expert Alumni

QBI Deduction for first time as church musician side work

Yes, it is very possible that you did earn the Qualified Business Income (QBI) Deduction on past year returns, but was not able to use it if your income was zeroed out by the Standard Deduction. 

 

If that was the case, you may have QBI carry-over that you can use this year or a future year. 

 

Please look at Form 8995 from prior years to see if there is an amount listed on line 16. If there is, you can add it (carry it forward) and apply it to your income this year. 

 

To enter go under 

  • Wages & Income
  • Business Items
  • Business Deductions and Credits START
  • Business Loss Carryovers (NOLs QBI) START 
  • Enter QBI carryover on the second screen in 
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QBI Deduction for first time as church musician side work

in prior years when you were getting a 1099-MISC was the income reported on Schedule C or elsewhere? 

QBI Deduction for first time as church musician side work

yes, I was getting a 1099-misc and my past returns the sched-C was in my return but I don't recall having the extra questions needed this year. seems TT created the sched-C for me?

MayaD
Expert Alumni

QBI Deduction for first time as church musician side work

TurboTax will generate Schedule C once you add your 1099-NEC. Form 1099-NEC specifically reports Nonemployee Compensation, which you may have gotten in previous years on a 1099-MISC. 

 

If you were self-employed or a small business, you probably qualify for the qualified business income (QBI) deduction. TurboTax will ask you some questions and will determine if you qualify for the deduction. 

For more information check: Do I qualify for the qualified business income deduction?

 

 

To deduct any self employment expenses: Where do I enter Schedule C?

What self-employed expenses can I deduct?

 

 

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QBI Deduction for first time as church musician side work

Ok, so it seems like the QBI is fair. I don't necessarily care to go back and try to claim for previous years. Just really making sure I wasn't raising a red flag by doing something incorrect based on what I had seen in past years. 

 

Thanks

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