The Qualified Business Income (QBI) deduction, available under Section 199A of the Internal Revenue Code, is not dependent on whether you itemize deductions. You may claim the QBI deduction regardless of whether you take the standard deduction or itemize deductions on your tax return.
The QBI deduction is calculated using Form 8995 or Form 8995-A, depending on your taxable income level and whether you are an individual, estate, or trust. For individuals with taxable income (before the QBI deduction) of $394,600 or less if married filing jointly, or $197,300 or less for all other filing statuses, Form 8995 is used for a simplified computation. Higher-income taxpayers or those with specific circumstances (such as being a patron in a specified agricultural or horticultural cooperative) use Form 8995-A for a more detailed calculation.
Estates and trusts may also claim the QBI deduction, but they must allocate Section 199A items based on distributable net income (DNI) and may either claim the deduction themselves or provide information to beneficiaries. Electing Small Business Trusts (ESBTs) must compute the deduction separately for S and non-S portions of the trust.
The QBI deduction is based on your qualified business income, qualified REIT dividends, and qualified PTP income, and is limited to 20% of your taxable income (before the QBI deduction) minus net capital gain (increased by any qualified dividends). It is not tied to itemized deductions or any other standard deduction thresholds.
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Disclaimer: Always verify details with the current year’s IRS Form 8995/8995-A instructions and your state’s Department of Revenue. For complex situations, consult a tax professional or attorney.