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If I earned 1099-MISC income as a federal government contractor for work done entirely outside the US, is any of that deductible as QBI?

 
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HelenaC
New Member

If I earned 1099-MISC income as a federal government contractor for work done entirely outside the US, is any of that deductible as QBI?

Yes, you may be able to claim the QBI deduction since it is with the federal government. To be considered Qualified Business Income, a taxable item must be effectively connected with the conduct of a trade or business within the United States or Puerto Rico, and included or allowed in determining the taxable income of the taxpayer for the tax year. 

  • Therefore, to the extent a taxpayer generates earnings that are not effectively connected with a U.S. trade or business, such earnings will not be eligible for the Section 199A deduction. 

To read the whole TurboTax FAQ, click on What is the Qualified Business Income (QBI) deduction? and IRS What is a qualified business income (QBI)?

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