Tax Tip – Qualified Business Income Deduction

Tax Tips provided by Don Fitch, CPA

Section 199A provides a deduction of up to 20% of income from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust, or estate.


The §199A deduction may be taken by individuals and by some estates and trusts. See Line 10, 2019 Form 1040. Starting in taxable year 2019, taxpayers must attach Form 8995, Qualified Business Income Deduction Simplified Computation, or Form 8995-A, Qualified Business Income Deduction as support for the §199A deduction. Taxpayers eligible to use Form 8995 include: (i) those who have QBI, qualified REIT dividends, or qualified PTP income or loss; (ii) those who have 2019 taxable income before QBI deduction less than or equal to the threshold amounts; and (iii) those who are not patrons in a specified agricultural or horticultural cooperative. All other taxpayers are required to use Form 8995-A. The §199A deduction is not available for wage income or for business income earned through a C corporation. The IRS’s Small Business/Self-Employed (SB/SE) Division issued a memorandum on December 9, 2019


(SBSE-04-1219-0054) stating that effective immediately, the IRS will not allow the QBI deduction on an IRS-prepared substitute return.

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This blog post is intended to serve solely as an aid in continuing tax education for Don Fitch Accountancy blog and email members. Due to the constantly changing nature of the subject of the materials, this product is not appropriate to serve as the sole resource for any federal tax, accounting opinion, tax return position, and must be supplemented for such purposes with other current authoritative materials. The information in this blog post has been carefully compiled from sources believed to be reliable, but its accuracy is not guaranteed. In addition, Don Fitch Accountancy is not engaged in rendering legal or other professional services and will not be held liable for any actions or suits based on this blog post, email, or comments made during the above presentation. If legal advice or other expert assistance is required, seek the services of a competent professional.

(Updated 02/24/2021 06:11)

Published by Don Fitch, CPA

Offers in Compromise, Wage Levy Releases, Installment Agreements, IRS Audits, and much more IRS assistance. Also, allow us to Help you complete your Tax Returns from 1913 to present (100+ Years) and for any of the 50 States.

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