How to File IRS Form 8995 for Qualified Business Income (QBI) Deduction for Schedule C Business

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Certain taxpayers may be able to deduct up to 20% of their qualified business income (QBI) from qualified trades or businesses. The QBI deduction under IRC Section 199A was added as part of the Tax Cuts and Jobs Act (TCJA) in 2017.

In this example, we look at a self-employed taxpayer with a consulting business run through a single-member disregarded LLC. The Taxpayer reports the income & expenses on Schedule C and completes Form 8995 to calculate the QBI deduction.

The deduction in this example is limited based on the overall 20% limitation on taxable income before the QBI deduction.

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