Yes, you can still claim the Qualified Business Income (QBI) deduction if you have multiple businesses, but you must determine whether to treat them as separate trades or businesses or aggregate them into a single trade or business for the purpose of applying the W-2 wage and Unadjusted Basis Immediately After Acquisition (UBIA) of qualified property limitations under section 199A.
Aggregation of Multiple Businesses
- Ownership Requirement: You or a group of persons must directly or indirectly own 50% or more of each trade or business for a majority of the tax year, including the last day of the tax year.
- Same Tax Year End: All trades or businesses must use the same tax year end.
- No SSTBs: None of the trades or businesses can be a Specified Service Trade or Business (SSTB).
- Business Similarity: The trades or businesses must meet at least two of the following factors:
- They provide products, property, or services that are the same or customarily offered together.
- They share facilities or significant centralized business elements (e.g., personnel, accounting, legal, manufacturing, purchasing, human resources, IT).
- They are operated in coordination with or reliance upon one or more of the businesses in the aggregated group.
If you choose to aggregate, you must complete Schedule B (Form 8995-A) before starting Part I of Form 8995-A. You may not separate trades or businesses aggregated by a Relevant Pass-Through Entity (RPE), but you may add additional businesses to the aggregation if the rules are met. Aggregations must be reported consistently each year unless there is a significant change in facts and circumstances.
Qualified Trades or Businesses
Your qualified trades and businesses generally include those for which you are allowed a deduction for ordinary and necessary business expenses under section 162. However, corporations and employee services are never qualified. SSTBs are excluded if your taxable income exceeds the threshold (e.g., $394,600 for married filing jointly in 2025). Rental real estate may qualify under section 162 or through the safe harbor in Revenue Procedure 2019-38.
Important Notes
- If you have a qualified business net loss for the year, you generally cannot claim the QBI deduction unless you have qualified REIT dividends or qualified PTP income. The loss is carried forward.
- If you have an SSTB, you may need to complete Schedule A (Form 8995-A) to determine the applicable percentage of income eligible for the deduction.
- For aggregation purposes, enter the aggregation group name on Line 1 of Form 8995-A and provide the EIN (or SSN/ITIN) and net QBI/(loss) on lines 1(b) and 1(c).
Source:
Form 8995-A
Disclaimer: Always verify with current Federal or State Department of Revenue Forms and Instructions. For complex situations, consult a CPA or tax attorney.