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Qualified Business Income Deduction

HOW TO FIGURE THE DEDUCTION

In general, the amount of the QBI deduction equals the QBI Component plus the
qualified REIT/PTP Component. However, the deduction is limited to the lesser of this
amount or 20 percent of taxable income minus net capital gain.

WORKSHEETS & FORMS

The QBI deduction is figured using one of two worksheets for 2018 or one of two forms

for 2019 and later:

1. Taxpayers should use the Simplified Worksheet in the Instructions for Form 1040

for 2018 or Form 8995 for all other years, if they have:

a. QBI, qualified REIT dividends, or qualified PTP income;

b. Taxable income before the QBI deduction is less than or equal to the

threshold. For 2018, the threshold is $157,500 ($315,000 if married filing
jointly). This amount is adjusted for inflation each subsequent year, see
Rev. Proc 2018-59 or its successor; and
The taxpayer isn’t a patron in a specified agricultural or horticultural
c.
cooperative.
2. Taxpayers should use Worksheet 12-A in Pub. 535 for 2018 and Form 8995-A

for all other years, if they have:
QBI, qualified REIT dividends, or qualified PTP income, and
a.
b. 2018 taxable income before QBI deduction is greater than $157,500

($315,000 if married filing jointly), this amount is adjusted for inflation each

subsequent year, see Rev. Proc 2018-59 or it successor; or

The taxpayer is a patron in a specified agricultural or horticultural
c.
cooperative.

May 2019

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