What this line means
If lines 2 and 3 together result in a negative QBI amount, the negative number goes here. This is the QBI loss you carry forward to next year’s Form 8995 line 2. It reduces your future QBI. If line 3 is zero or positive, this line is zero — there is nothing to carry forward. 1
Does this apply to you?
- Your total QBI on line 1 was negative (business losses exceeded business income)
- Your prior-year carryforward on line 2 plus current-year QBI on line 1 produces a net negative amount
- You entered zero on line 3 because the combined amount was negative — the negative portion is captured here
- Your combined QBI is positive (this line is zero)
Easy to overlook
You must track this amount yourself for next year’s return There is no IRS system that automatically carries this forward. You need to keep a copy of this year’s Form 8995 so you can enter line 17 on next year’s line 2. If you switch tax software or preparers, this carryforward can get lost. Write it down somewhere you will find it next filing season. 2 IRS Form 8995 Instructions — Line 17
Partial carryforwards happen when prior losses are only partially absorbed If you carried forward a $40,000 QBI loss from last year (line 2) and earned $25,000 in QBI this year (line 1), the combined amount is negative $15,000. You enter zero on line 3 and $15,000 here as the remaining carryforward. The loss is used up gradually, not all at once. 3 IRS Publication 535 — Qualified Business Income Deduction
Watch out for this
Confusing this with the REIT/PTP loss carryforward on line 18. These are separate pools. The QBI loss carryforward on this line goes to next year’s line 2. The REIT/PTP loss carryforward on line 18 goes to next year’s line 6. Mixing them up puts the wrong amount on the wrong line next year and produces an incorrect deduction.
Footnotes
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IRS Form 8995 Instructions, Line 17. https://www.irs.gov/instructions/i8995 ↩
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IRS Form 8995 Instructions, Line 17 — Carryforward Tracking. https://www.irs.gov/instructions/i8995 ↩
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IRS Publication 535, Business Expenses, Chapter 12 — QBI Loss Carryforward. https://www.irs.gov/pub/irs-pdf/p535.pdf ↩