Can I really claim QBI Deduction on my freelance work? Is it this easy?
I'm messing around with my 2024 taxes early using TurboTax online and got surprised when it just flat out said I qualify for a QBI deduction of 20% on my freelance income. Last year when I used the desktop version, it never flagged QBI for me at all. When I tried to double-check this section, it just said I qualified without asking me to do anything else. That seemed too easy. Is getting the QBI deduction on freelance income really this straightforward? Did TurboTax update something this year to catch more QBI opportunities for freelancers? Some context: My freelance money isn't much so I'm nowhere near any income thresholds that would phase this out. (I basically just help out another company when they need extra hands doing the same kind of work as my regular job). I don't have any expenses related to the freelance work, no formal contract, just get a 1099-NEC at year end. If this is legit, I'm wondering if I should go back and amend my 2023 return to add a QBI deduction. I actually made more freelance income last year – could potentially get back around $1200 in taxes if I did this.
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NeonNova
Yes, it really is that easy! The Qualified Business Income (QBI) deduction is one of the better tax breaks for self-employed folks and small business owners, and freelance work reported on a 1099-NEC typically qualifies. The 20% deduction applies to your net profit from self-employment (after expenses), and since you mentioned you don't have expenses, it would be 20% of your total freelance income. As long as your total taxable income is below $170,050 for single filers or $340,100 for joint filers (2024 thresholds), the calculation is pretty straightforward. TurboTax might have improved their algorithm to better identify QBI opportunities. The desktop and online versions sometimes have different detection capabilities. As for amending your previous return - absolutely worth considering! The potential $1200 refund definitely justifies the effort of filing an amended return. You generally have 3 years from the original filing date to amend and claim a refund.
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Yuki Tanaka
•Does the QBI deduction affect self-employment taxes too, or just income tax? And do you need to have an actual registered business to qualify, or does just receiving a 1099-NEC count as being "in business"?
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NeonNova
•The QBI deduction only reduces your income tax, not your self-employment taxes. So you'll still pay the full self-employment tax (15.3% for Social Security and Medicare) on your freelance income. You don't need to have a registered business to qualify for QBI. Simply receiving a 1099-NEC for services you provide as an independent contractor is sufficient to be considered a business for tax purposes. The IRS considers this a "sole proprietorship" even without formal registration.
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Carmen Diaz
I was in a similar situation last year with my side gig doing graphic design work. I tried using different tax prep software and kept getting confused about whether I qualified for QBI. Eventually I tried taxr.ai (https://taxr.ai) which helped me analyze my 1099s and other tax documents. It confirmed I qualified for QBI deduction even though my "business" was just me doing freelance work with no formal setup. Their system explained that QBI applies to most self-employment income regardless of business structure as long as you're under certain income thresholds. Their document analysis helped me understand exactly what qualified and showed me what to look for in the tax software. Saved me a ton of headache trying to figure out if I was doing it right.
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Andre Laurent
•How does taxr.ai work exactly? Is it just another tax software or something different? I'm getting conflicting info about QBI from different sources.
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Emily Jackson
•Did it actually help you find other deductions too? I'm always suspicious these services just tell you stuff you already know or could Google for free.
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Carmen Diaz
•It's not a tax filing software but more like an AI assistant that analyzes your tax documents and answers questions. You upload your tax forms and it explains what everything means and what you qualify for based on your specific situation. It definitely found other deductions I missed. For example, I didn't realize some of my home internet costs could partially qualify as business expenses since I use it for client meetings and file transfers. It also pointed out that my health insurance premiums as a self-employed person could potentially be deductible in my situation. These weren't things I would have easily found on Google because they were specific to my particular situation.
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Andre Laurent
Just wanted to update after trying taxr.ai that the previous commenter recommended. It was super helpful for my situation! I uploaded my previous years' tax returns and my current 1099-NEC and it immediately confirmed I was eligible for QBI on my freelance photography income. What was really useful is it explained exactly why I qualified and showed me where to look in my return to make sure it was applied correctly. Turns out I missed claiming QBI for the past two years, so I'm definitely filing amendments now. The system estimated I'm owed about $1,700 in refunds! Also showed me how to document everything properly in case of audit.
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Liam Mendez
If you're planning to amend your previous year's return to claim the QBI you missed, be prepared for possibly long wait times trying to get through to the IRS if you have questions. I had to amend my return last year for a missed deduction and it was a nightmare trying to confirm if I was doing it right. After weeks of failed attempts calling the IRS, I used https://claimyr.com to get through to an IRS agent. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone system for you and call you back when they reach an agent. Saved me hours of hold time and frustration. The IRS agent I spoke with confirmed exactly how to file the amendment and what documentation I needed. Definitely worth it since amending returns can trigger additional scrutiny.
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Ethan Wilson
•Does this service actually work? The IRS wait times are ridiculous when I've tried calling in the past. How long did it take for you to get a callback?
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Sophia Nguyen
•Sounds like a scam honestly. Why would I pay someone to call the IRS? Can't they just connect with you on the line rather than calling you back? Seems sketchy.
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Liam Mendez
•It definitely works! When I used it, I got a callback in about 45 minutes. For comparison, I had previously spent multiple days trying to reach someone, waiting on hold for hours, and getting disconnected. The time savings alone was worth it to me. It's not a conference call service - they actually navigate through the IRS phone tree and wait on hold for you, then when they reach an agent, they immediately call you so you can talk directly to the IRS. You're not paying someone to talk to the IRS for you, you're paying to avoid the hold time and frustration of getting disconnected after waiting.
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Sophia Nguyen
Just wanted to say I was totally wrong about Claimyr being a scam. I was skeptical but desperate after trying to reach the IRS for days about my amended return situation (similar to the original poster - missed QBI deductions for freelance work). I tried the service and it worked exactly as described. Got a call back in about 30 minutes and was connected with an actual IRS representative who answered all my questions about how to properly document my QBI deduction on the amended return form. They even confirmed I was using the correct form (1040-X) and helped me understand which schedules needed to be updated. Definitely saved me from making mistakes that might have caused further delays.
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Jacob Smithson
One thing to watch out for with QBI - if you do this same freelance work for the same company that employs you regularly, the IRS might consider this as trying to reclassify wages as contractor income to get the QBI deduction. Theres some anti-abuse rules they have. Not saying this applies to ur situation necessarily, but be careful if your freelance work and regular job are for the same company or very related companies. The IRS specifically looks for people trying to convert W-2 wages into 1099 income to get QBI.
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Ethan Wilson
•That's actually a really good point I hadn't considered. My freelance work is for a completely different company than my main employer - they're not related at all. They're in the same industry but totally separate businesses. Does that still raise red flags?
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Jacob Smithson
•You should be fine if they're completely separate companies. The IRS is mainly looking for situations where someone is getting both W-2 and 1099 income from the same business entity or related entities (like subsidiaries or affiliates). Since your freelance work is for a different company in the same industry, that's a common and legitimate arrangement. Just make sure the work arrangements are clearly different - like the freelance company doesn't control when or how you do the work the way an employer would.
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Isabella Brown
Is there any minimum amount of freelance income needed to qualify for QBI? I only made about $3,000 from my side gig last year but would love to get that 20% deduction.
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NeonNova
•There's no minimum income requirement to qualify for the QBI deduction! Your $3,000 in freelance income would be eligible for the 20% deduction, giving you about $600 off your taxable income. It's not a huge amount but definitely worth claiming. The main requirements are that it's qualified business income (which freelance work on a 1099-NEC typically is) and that you're under the income thresholds (which at $3,000 you definitely are). Make sure you're reporting it on Schedule C even for that small amount.
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