If you're in the business of farming and report your farm income on Schedule F (Form 1040 or Form 1040-SR), you may qualify for the Qualified Business Income Deduction (QBID), also called the Section 199A deduction.
The QBID can allow eligible taxpayers to deduct up to 20% of their qualified business income, which may reduce the amount of federal income tax they owe.
To enter your farm income and determine whether you qualify for the deduction, follow these steps in the program:
- Go to the Federal section.
- Select Income (Select My Forms).
- Choose Profit or Loss From Farming (Schedule F).
- Enter your farming income and expenses.
- Complete the Qualified Business Income questions when prompted.
How Is My QBID Calculated?
After you enter your farming information and answer the Qualified Business Income questions, the program automatically calculates your QBID based on your entries and the current tax rules.
The calculation may consider factors such as:
- Your qualified business income from farming
- Your taxable income
- Any applicable income limitations
- Other qualified trades or businesses reported on your return
If you're eligible, the deduction will be included on your tax return automatically.