Form 8995 Qualified Business Income Deduction Simplified Computation
The Qualified Business Income Deduction (QBID) is for sole proprietors and S-Corp owners.
Depending on your total income and the amount made by the business, the form does a calculation.
You’ll either get 20% of the business income or 20% of your AGI after the standard deductions. Essentially the IRS doesn’t want to give you too much of a deduction that would result in you having $0 in taxable income.
What qualifies as a qualified business income deduction?
Generally, this includes but is not limited to, the deductible part of self-employment tax, self-employed health insurance, and deductions for contributions to qualified retirement plans (e.g. SEP, SIMPLE and qualified plan deductions).
The qualified business income (QBI) deduction, also known as Section 199A, allows owners of pass-through businesses to claim a tax deduction worth up to 20 percent of their qualified business income. It was introduced as part of the 2017 tax reform called the Tax Cuts and Jobs Act (TCJA)