Note: This form is planned for a future release and is not yet available in PaisaTax. The information below is for educational reference only.
What is Form 8995?
Form 8995 (simplified) calculates the Qualified Business Income (QBI) deduction — 20% of net qualified business income from sole proprietorships, partnerships, S corporations, and other pass-through entities. The deduction is limited to 20% of taxable income before the QBI deduction (excluding net capital gains and qualified dividends). Prior-year QBI losses carry forward and reduce current-year QBI.
SupportedKey Lines
| Line | Description | Destination |
|---|---|---|
| Line 2 | Qualified business income (from Schedule C) | QBI base |
| Line 10 | Total QBI component (20% of QBI) | Before taxable income limit |
| Line 11 | Taxable income before QBI deduction | Cap check |
| Line 15 | QBI deduction (lesser of Line 10 or 20% of Line 11) | Form 1040 Line 13 |
How PaisaTax Handles It
- Computed from Schedule C net profit as the primary QBI source
- 20% calculation applied to total qualified business income
- Taxable income cap ensures deduction does not exceed 20% of taxable income (excluding capital gains/qualified dividends)
- Loss carryforward from prior-year QBI losses reduces current-year QBI
Common Situations
- Freelancer with Schedule C profit: $80,000 net profit yields $16,000 QBI deduction (20%).
- Taxable income limitation: If taxable income is $50,000, the QBI deduction is capped at $10,000 (20% of $50K).
- Prior-year loss carryforward: A $20,000 QBI loss from last year reduces this year's QBI before calculating the 20%.