form 8995

[g2consulting]

Line 1.i on Form 8995 shows my self-employment income as a number which is less than the income shown on Schedule 1 line 10 so I am not getting as much of a qualified income business deduction (20% deduction) as I had planned on.  Why would the amounts be different?

[DawnC]

Schedule 1, Line 10 shows a total of all of your other income.   Look on Line 3 of Schedule 1 to see the amount of business income reported.   That should match what is on Form 8995 - QBI deduction.   

[g2consulting]

Schedule 1 Line 3 and Schedule 1 line 10 both show the same amount.  The amount shown on Form 8995 Line 1.i. is approximately $13,000 less.  Should they be the same amount?  Why would it be lower?

[RobertB4444]

Here's the skinny from the IRS-

QBI Component. This component of the deduction equals 20 percent of QBI from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust, or estate. The QBI Component is subject to limitations, depending on the taxpayer's taxable income which may include the type of trade or business, the amount of W-2 wages paid by the qualified trade or business, and the unadjusted basis immediately after acquisition (UBIA) of qualified property held by the trade or business. It may also be reduced by the patron reduction if the taxpayer is a patron of an agricultural or horticultural cooperative.

There are a number of things that can effect what portion of your income is qualified.  Your total business income often is not.

@g2consulting 

[g2consulting]

Also, my Schedule C line 31 (net profit) matches the higher amount.  Yet Form 8995 shows a smaller amount.  Why would this be?

[RobertB4444]

Again, from the IRS-

QBI does not include items such as:

• Items that are not properly includable in taxable income
• Investment items such as capital gains or losses
• Interest income not properly allocable to a trade or business
• Wage income
• Income that is not effectively connected with the conduct of business within the United States
• Commodities transactions or foreign currency gains or losses
• Certain dividends and payments in lieu of dividends
• Income, loss, or deductions from notional principal contracts
• Annuities, unless received in connection with the trade or business
• Amounts received as reasonable compensation from an S corporation
• Amounts received as guaranteed payments from a partnership
• Payments received by a partner for services other than in a capacity as a partner
• Qualified REIT dividends
• PTP income

@g2consulting 

[g2consulting]

 I should also add that our total taxable income is below the limits which would adjust this income amount.  Is there any way I can see the calculations for the amount shown on Form 8995 Line 1.i. to see how an adjustment was calculated?

[ThomasM125]

Most likely your business income is being reduced by your self-employment tax listed on line 15 of schedule 1, and/or the IRA or other pension plan deductions listed on line16 or 20 of schedule 1, and/or the self-employed health insurance deduction on line17 of schedule 1. All of these items reduce your business income before the QBI deduction calculation is allowed. Also, any unreimbursed partnership expenses deducted on schedule E would be subtracted from your business income to arrive at your QBI income.

Also, capital gains, dividends and foreign income would be subtracted from your business income to arrive at the QBI income. They are listed on page one of your Form 1040.

To view your form 1040 and schedule 1 to 3:

1. Choose Tax Tools from your left menu bar in TurboTax Online
2. Choose Tools
3. Choose View Tax Summary
4. See the Preview my 1040 option in the left menu bar and click on it
5. Choose the Back option in the left menu bar when you are done

There are two worksheets in TurboTax where you can see QBI calculations, the QBI component and QBI deduction summary.