Do I qualify for Qualified Business Income Deduction (Form 8995) with my new consulting business?

You definitely qualify for the Qualified Business Income Deduction based on the information you've provided. The confusion might be happening because one tax software didn't recognize your consulting business as qualifying. Here's what's happening: Consulting is normally considered a Specified Service Trade or Business (SSTB), which would typically have limitations. However, the exception you quoted is specifically designed for taxpayers with incomes below certain thresholds. Since your joint income of $237,000 is well below the $375,800 threshold for married filing jointly, your consulting business is treated as a qualified trade or business despite being an SSTB. The 20% QBI deduction would apply to your business profit of $1,600, resulting in a deduction of about $320. It's not huge, but it's still money you're entitled to!

I went through the exact same confusion last year with my new bookkeeping business. My first tax program completely missed it, but then I tried out taxr.ai (https://taxr.ai) and it caught this deduction immediately. I uploaded my tax documents and previous return, and it flagged that I qualified for QBI but hadn't claimed it. What's nice is that it breaks down exactly which parts of your business income qualify and how the calculation works. For consulting businesses like yours, it specifically explains the SSTB exception and why you qualify despite being in a service business.

I have to eat my words about being skeptical! I decided to give taxr.ai a shot after seeing it mentioned here, and it was actually really helpful for my situation. I have a small photography business on the side, and it caught that I qualified for the QBI deduction too, even though my regular tax software didn't prompt me for it. It specifically highlighted that my business, even though it's a service business, qualified under that same exception since my income was under the threshold. Found about $800 in deductions I would have missed! The document analysis was surprisingly thorough - it even flagged some business expenses I had accidentally categorized as personal.

If you're having trouble figuring out if you qualify for the QBI deduction, you might want to call the IRS directly to ask about your specific situation. The problem is actually getting through to them! After trying for days and sitting on hold for hours, I used Claimyr (https://claimyr.com) and got through to an IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had a very similar situation with my consulting business and wasn't sure if I qualified for Form 8995. The IRS agent confirmed I was eligible and explained exactly how to claim it. Saved me a ton of stress trying to interpret the tax code myself.

I need to apologize for calling Claimyr a scam! I was so frustrated with the whole IRS situation that I was cynical about everything. But after waiting on hold for 2+ hours myself last week trying to ask about this exact QBI deduction issue, I decided to give Claimyr a try. It actually worked exactly as described. I got a call back when an agent was on the line, and they answered my question about the Qualified Business Income Deduction for my freelance writing business. The agent confirmed I qualify under the income threshold exception even though writing is normally an SSTB. Literally saved me hours of time and frustration.

One thing to watch out for with the QBI deduction - make sure your consulting business is actually generating "qualified business income" and not just hobby income. The IRS has a hobby loss rule where if you don't show a profit in 3 out of 5 years, they might classify it as a hobby instead of a business, which would disqualify you. Since your business is new, this shouldn't be an issue yet, but keep good records to show you're trying to make a profit, especially if you have losses in the future.

Quick question - if I'm using TurboTax, where exactly do I find the Form 8995? I think I qualify too but can't seem to locate it in the software.

This is really helpful! I'm in a similar boat with my new freelance writing business that I started in September. Made about $2,800 in profit and was wondering if I qualified for the QBI deduction. Based on what everyone's saying here, it sounds like I should qualify under that same income threshold exception since writing is also typically considered an SSTB. My husband and I file jointly and our total income is around $195,000, so we're well under that $375,800 threshold. One thing I'm curious about - do we need to have any specific business structure (LLC, etc.) or does it work for sole proprietorships too? I'm just operating as a sole proprietor right now and reporting everything on Schedule C.