Question 1

What is the QBI deduction?

Accepted Answer

The Qualified Business Income (QBI) deduction is a 20% deduction on net income from pass-through businesses created by IRC §199A. It is available to sole proprietors, partnerships, S-corporations, and certain trusts and estates.

Question 2

Who qualifies for the §199A deduction?

Accepted Answer

Owners of a qualified trade or business (a §162 trade or business other than the trade or business of being an employee) with taxable income above zero. Above the §199A(e) threshold, additional W-2 wage and UBIA limitations apply, and Specified Service Trades or Businesses (SSTBs) phase out.

Question 3

What is an SSTB?

Accepted Answer

A Specified Service Trade or Business under §199A(d)(2) — health, law, accounting, actuarial, performing arts, consulting, athletics, financial / brokerage services, investing, or any business whose principal asset is the reputation or skill of its owners. SSTB income phases out above the threshold.

Question 4

What are the W-2 wage and UBIA limits?

Accepted Answer

Above the threshold, the QBI component for each business is capped at the greater of (a) 50% of W-2 wages paid by the business, or (b) 25% of W-2 wages plus 2.5% of the unadjusted basis immediately after acquisition (UBIA) of qualified property — see §199A(b)(2)(B).

Question 5

What is the difference between Form 8995 and Form 8995-A?

Accepted Answer

Form 8995 is the simplified form for filers with taxable income below the §199A threshold. Form 8995-A is the longer form required when taxable income exceeds the threshold and the wage / UBIA limits or SSTB phase-out apply.

Qualified Business Income Deduction