Form 8995
Form 8995
Qualified Business Income Deduction Simplified Computation
Every line is explained below in plain English — click any line to see what it means, who needs to fill it in, and what people commonly overlook.
Qualified Business Income
- 1 Total Qualified Business Income The combined qualified business income from every trade or business you operated or invested in during the year.
- 2 QBI Loss Carryforward From Prior Year The net QBI loss carried forward from last year's tax return.
- 3 Total Qualified Business Income Combined The sum of lines 1 and 2 -- your current-year QBI plus any loss carryforward from prior years. If the result is zero or negative, enter zero.
- 4 QBI Component Line 3 multiplied by 20%. This is the QBI portion of your total Section 199A deduction. If your combined QBI on line 3 is $100,000, this line is $20,000.
REIT Dividends & PTP Income
- 5 REIT Dividends and PTP Income Your total qualified REIT dividends and publicly traded partnership (PTP) income for the year.
- 6 REIT and PTP Loss Carryforward From Prior Year The net REIT/PTP loss carried forward from last year's tax return.
- 7 Total REIT Dividends and PTP Income The sum of lines 5 and 6 -- your current-year REIT dividends and PTP income plus any loss carryforward from prior years.
- 8 REIT and PTP Component Line 7 multiplied by 20%. This is the REIT/PTP portion of your total Section 199A deduction.
QBI Deduction Calculation
- 9 Total QBI Deduction Before DPAD The sum of lines 4 and 8 -- your QBI component plus your REIT/PTP component.
- 10 Taxable Income Before QBI Deduction Your taxable income from Form 1040 line 15 before subtracting the QBI deduction.
- 11 Net Capital Gain Your net capital gain for purposes of the QBI income limitation. If you file Schedule D, use the amount from Schedule D line 21 (if positive).
- 12 Income Less Net Capital Gain Line 10 minus line 11 -- your taxable income with capital gains removed. If the result is zero or less, enter zero.
- 13 Income Limitation Line 12 multiplied by 20%. This is the maximum QBI deduction allowed based on your taxable income.
- 14 QBI Deduction Before DPAD The smaller of line 9 or line 13. This comparison ensures your QBI deduction does not exceed 20% of your taxable income (net of capital gains).
- 15 Cooperative DPAD The domestic production activities deduction (DPAD) under Section 199A(g) allocated to you from an agricultural or horticultural cooperative.
- 16 Total Qualified Business Income Deduction The sum of lines 14 and 15 -- your final qualified business income deduction. This is the number that goes on Form 1040 line 13a.