2 QUESTIONS

The Qualified Business Income Deduction is 20% of your Qualified Business Income (QBI).  QBI is the net amount of qualified items of income, gain, deduction, and loss from any qualified trade or business.

Many owners of sole proprietorships, partnerships, S corporations and some trusts and estates may be eligible for a qualified business income (QBI) deduction – also called the Section 199A deduction – for tax years beginning after December 31, 2017. The deduction allows eligible taxpayers to deduct up to 20 percent of their QBI, plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. Income earned through a C corporation or by providing services as an employee is not eligible for the deduction.

Note that there are limitations to being able to take the QBI deduction when a taxpayer's taxable income exceeds the threshold amount. For 2023, the thresholds for phaseout begin at $364,200 Married Filing Jointly and at $182,100 for all other filing thresholds 

The deduction is available regardless of whether taxpayers itemize deductions on Schedule A or take the standard deduction. Eligible taxpayers can claim the deduction for tax years beginning after December 31, 2017, and currently the QBI deduction is scheduled to end after December 31, 2025.

Your business income and expenses are all reported on Schedule C, Profit or Loss from Business.  In TurboTax, navigate to the Self-Employed section, answer the questions about your business, then enter the income and expenses under the appropriate categories.  Note that once you enter what type of business you have, TurboTax will automatically generate a listing of the expenses that are common for that business! You would simply have to add the dollar amounts of expenses you incurred for each category. If you have expenses for a category that is not listed, there is a link to add other expenses - just click on that link, search the list of all expenses, and add the ones that apply to your business.

If you are self-employed, the QBI deduction will be calculated based on amounts you report on your Schedule C. Therefore, as long as you report all of your business income and expenses on Schedule C, they will be counted towards your QBI Deduction.