TurboTax will automatically calculate the Qualified Business Income Deduction if your entries and answers to questions show that you are qualified for the deduction.
The Qualified Business Income (QBI) deduction allows non-corporate taxpayers to deduct up to 20% of their qualified business income. See this help article for more information. For the purposes of the deduction, QBI is defined as net business income, excluding:
- Income generated outside the United States
- Investment income
- W-2 compensation paid to an S corporation owner
- Guaranteed payments to a partner
- Income from REITs, publicly traded partnerships, and qualified cooperatives (these entities may qualify for a 20% deduction under a different set of rules, the explanation of which is beyond the scope of this FAQ).
This deduction applies to Schedule C filers (sole proprietorships and other self-employed businesses), LLCs, partnerships, S corporations, estates, and trusts. Certain rental enterprises may also qualify.
Business owners and beneficiaries with income from a partnership, S corporation, or trust reported on Schedule K-1 are generally eligible for the QBI deduction. See this help article for more information regarding QBI and Schedule K-1.
You can preview your return before filing to find out how your taxes were calculated and to review the forms and worksheets TurboTax has prepared from your entries. See here for details.
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