How do I correctly calculate Qualified Business Income for my single-member LLC?
I've been breaking my head trying to figure out how to calculate the Qualified Business Income (QBI) for my single-member LLC. I don't have any other income sources - just my self-employed income that goes on Schedule C. Last year I used TurboTax and it seemed to calculate my QBI as: Profit (revenue minus expenses) minus 50% of Self-Employment Tax minus SE health insurance minus SE retirement deduction = QBI Does that sound right to everyone? Or am I missing something - like do I also need to subtract the Standard Deduction ($18,050) from this calculation too? Just to be super clear - I'm looking for the QBI figure BEFORE applying the 20% deduction. I just want to make sure I'm starting with the right number before I apply that percentage. Any help would be massively appreciated! I'm trying to estimate what my deduction will be for this year's taxes.
20 comments
Join the conversation
Connor Gallagher
The calculation you described from TurboTax is correct for determining your Qualified Business Income! The formula is: QBI = Net Business Income (Schedule C profit) - 50% SE tax - SE health insurance premiums - SE retirement plan contributions The standard deduction ($18,050 for 2025 single filers) is NOT subtracted when calculating your QBI. The standard deduction is completely separate and has nothing to do with determining your QBI amount. It's used to reduce your overall taxable income, but it doesn't factor into the QBI calculation at all. Once you have your QBI figure using the formula above, then you'd apply the 20% deduction to get your actual QBI deduction amount that reduces your taxable income (subject to income limitations if your taxable income exceeds certain thresholds).
0 coins
Yara Sayegh
•So wait, if my Schedule C shows $85,000 profit, and I paid about $12,000 in SE tax (so 50% would be $6,000), $4,500 for health insurance, and contributed $15,000 to my SEP IRA, my QBI would be $85,000 - $6,000 - $4,500 - $15,000 = $59,500? And then I'd get a deduction of 20% of that, or $11,900?
0 coins
Connor Gallagher
•That's exactly right! Your QBI would be $59,500 in that scenario, and your QBI deduction would be $11,900 (20% of $59,500). Just remember that there can be limitations on the QBI deduction if your taxable income (after standard deduction) exceeds the threshold amounts ($190,000 for single filers in 2025). But for most small business owners with income below those thresholds, it's as straightforward as the calculation you just did.
0 coins
Keisha Johnson
I struggled with this exact issue last year! After hours of research I found this amazing tool at https://taxr.ai that really helped me understand my QBI calculation. I was doing it all wrong before - thought I needed to subtract way more than necessary which cost me thousands. The tool analyzed my Schedule C and other tax docs and showed me exactly what qualified for QBI and what didn't. It even flagged some business expenses I hadn't properly categorized that affected my calculation!
0 coins
Paolo Longo
•Does it work with rental property income too? I have some Schedule E income that might qualify for QBI but I'm not sure.
0 coins
CosmicCowboy
•How accurate is it compared to working with an actual CPA? I'm wondering because my situation is complicated with multiple sources of self-employment income.
0 coins
Keisha Johnson
•Rental property income can qualify for QBI under certain circumstances, and the tool specifically addresses Schedule E income. It helps determine if your rental activities rise to the level of a "trade or business" that would qualify for QBI. The accuracy is impressive - I actually compared it with what my friend's CPA calculated and it matched exactly. For multiple self-employment income sources, it handles that really well by analyzing each source separately and then combining them appropriately for your QBI calculation.
0 coins
CosmicCowboy
Just wanted to update about my experience with taxr.ai after trying it based on the recommendation above. Seriously blown away! I uploaded my previous year's returns and it immediately pointed out that I'd been calculating my QBI wrong for my multiple businesses. Turns out I wasn't properly aggregating my qualified business income across different activities, and I was over-deducting some expenses that shouldn't have impacted QBI. The tool explained everything in plain English and showed me exactly what to fix. What surprised me most was how it caught that one of my side businesses actually qualified as a specified service trade or business (SSTB), which has different QBI rules. Definitely saved me from making the same mistakes again this year!
0 coins
Amina Diallo
If you're struggling with QBI calculations, you're not alone! I was in the same boat and kept trying to call the IRS for clarification but could never get through. Then I found https://claimyr.com and used their service to actually get through to an IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent was super helpful and walked me through how the QBI deduction works for my specific situation. Turns out I was eligible for some QBI deductions I didn't even know about! The time saved was incredible - no more waiting on hold for hours.
0 coins
Oliver Schulz
•Wait, you can pay someone to wait on hold with the IRS for you? How does that even work? Sounds too good to be true.
0 coins
Natasha Orlova
•Yeah right. I've tried everything to get through to the IRS and nothing works. They'll probably just take your money and you'll still be waiting forever.
0 coins
Amina Diallo
•It's not that they wait on hold FOR you exactly. What happens is they have a system that holds your place in line, and when an actual IRS agent picks up, the service calls you and connects you directly to that agent. So you don't waste hours with your phone to your ear listening to that awful hold music. I was super skeptical too at first! But I was desperate after trying for weeks to get through. I think what they do is use some kind of system that can process thousands of calls simultaneously, which individual people obviously can't do. When I got the call back with an actual IRS agent on the line, I was honestly shocked it worked.
0 coins
Natasha Orlova
I have to eat crow here. After posting my skeptical comment, I decided "what the hell" and tried Claimyr. I fully expected to waste my money, but I was at my wit's end trying to get clarification on my QBI calculation. I got connected to an IRS agent in about 75 minutes (while I was just going about my day), and the agent walked me through exactly how to handle QBI for my situation which involves both Schedule C income and a partnership interest. Turns out I've been doing it wrong for 3 years! The agent even helped me understand if I should file amended returns based on the calculation errors. Never thought I'd say this, but being able to actually TALK to the IRS solved my problem in one day after weeks of confusion.
0 coins
Javier Cruz
One thing nobody's mentioned about QBI calculation that tripped me up - if your taxable income is over the threshold ($190k for singles), the calculation gets WAY more complicated with phase-outs and limitations based on W-2 wages paid and qualified property. My Schedule C is pretty straight forward but because I have investment income that pushed me over the threshold, I had to deal with the complicated version of QBI rules.
0 coins
Emma Wilson
•Do you know if there's a good calculator online that can help with the more complicated version? I might be in the same boat this year.
0 coins
Javier Cruz
•I haven't found a simple free calculator that handles the complexity well. Most online calculators only do the basic calculation. I ended up having to use a spreadsheet I created based on the IRS worksheets in Publication 535. TurboTax and other paid tax software do handle the more complex calculations automatically though, which is why I just bit the bullet and paid for the premium version last year. It was worth it not to have to figure out all the phase-out math myself.
0 coins
Malik Thomas
Random question - does anyone know if guaranteed payments from an LLC taxed as a partnership qualify for QBI? I've heard conflicting things.
0 coins
Connor Gallagher
•Guaranteed payments do NOT qualify for QBI. They're treated more like wages to the partner rather than a distributive share of business income, so they're specifically excluded from the QBI calculation. I learned this the hard way when I had both guaranteed payments and distributive share income from my partnership. Only the distributive share portion qualified for QBI.
0 coins
Mei Wong
This is such a helpful thread! I'm in a similar situation with my single-member LLC and have been stressing about getting the QBI calculation right. One thing I want to add that might help others - make sure you're using the correct SE tax amount in your calculation. The "50% of SE tax" that gets deducted from your QBI should match exactly what you deduct on Form 1040 line 15 (the deductible portion of self-employment tax). I made the mistake of using 50% of my total SE tax liability instead of the actual deductible portion, which threw off my entire QBI calculation. The deductible portion is slightly less than 50% due to how SE tax is calculated. Also, for anyone using tax software, double-check that your health insurance premiums are properly coded as self-employed health insurance. If they're mistakenly categorized as a business expense on Schedule C, you could be double-deducting them in your QBI calculation.
0 coins
Ella Russell
•This is such great additional detail! I actually made that exact mistake with the SE tax calculation when I first tried doing this myself. I was using exactly 50% instead of the actual deductible portion and couldn't figure out why my numbers didn't match what TurboTax was showing. The health insurance coding issue you mentioned is also super important - I can see how easy it would be to accidentally categorize those premiums wrong and mess up the whole calculation. Thanks for sharing these specifics, really helps avoid those common pitfalls! Do you happen to know if there's an easy way to double-check that the SE health insurance is coded correctly before finalizing everything?
0 coins