IRS Form 8995 Instructions: QBI, REIT Dividends, and Carryforwards

Form 8995 is the simplified, single-page form for claiming the Qualified Business Income deduction, and these Form 8995 instructions walk you through it line by line. The form has 17 numbered lines and no separate parts or schedules. You enter your net business income, add any qualified REIT dividends and publicly traded partnership income, multiply by 20%, and compare that figure to 20% of your taxable income. The smaller number is your deduction.

You can use this shorter form if your taxable income before the QBI deduction is at or below $201,750 (single, head of household, or married filing separately) or $403,500 (married filing jointly) for 2026, you have QBI or qualified REIT/PTP income, and you are not a patron of a specified agricultural or horticultural cooperative.¹ Miss any of those three, and you are on Form 8995-A instead.

Confirm You Belong on Form 8995

Cooperative patrons must use Form 8995-A no matter what their income looks like, because the deduction involves an extra reduction tied to cooperative payments. Everyone else who exceeds the income threshold also moves to 8995-A, which layers in W-2 wage limits, unadjusted basis of qualified property, and specified service trade or business (SSTB) rules.

One point worth stating plainly: if you are under the threshold and eligible for Form 8995, the SSTB classification does not affect your deduction. A dentist, lawyer, or consultant below the income limit calculates QBI the same way as a plumber or a retailer. The SSTB rules only engage once you cross into 8995-A territory.

Gather Your Numbers First

The form itself is quick. The work is assembling accurate figures beforehand. You need three pieces of income information:

Net QBI from each trade or business, pulled from Schedule C, Schedule F, Schedule E, or Schedule K-1. If you received a K-1 from a partnership or S corporation, the QBI amounts appear on an attachment to the K-1 labeled as items subject to taxpayer-specific determinations, and you need to review them yourself rather than assume the figures flow through automatically.²
Qualified REIT dividends, found in box 5 of Form 1099-DIV from your brokerage or REIT fund.
Qualified PTP income or loss, reported on the Schedule K-1 from the publicly traded partnership.

If you are self-employed, reduce your QBI by the deductible half of self-employment tax, your self-employed health insurance premium deduction, and contributions to qualified retirement plans such as a SEP-IRA or SIMPLE IRA.³ Skipping these adjustments inflates QBI and is one of the most common mistakes on this form.

A few things do not count as QBI even when they feel connected to your business: reasonable compensation an S corporation pays you as an officer, guaranteed payments a partnership makes to you for services, and investment income like capital gains, unrelated interest, and most dividends.³ C corporation income and W-2 wages are not QBI either. The one exception on wages: statutory employees whose W-2 has box 13 checked report on Schedule C, and that income is eligible.²

Lines 1 Through 5: The QBI Component

Lines 1(a) through 1(v) give you room for up to five trades or businesses. For each, enter the business name, its taxpayer identification number, and the net QBI or loss. Income is a positive number; a loss is negative.¹

Line 2 totals those amounts. If one business made $80,000 and another lost $30,000, Line 2 is $50,000. A loss in one business offsets income from another directly.

Line 3 is where you enter any qualified business net loss carryforward from a prior year. This reduces current-year QBI but cannot push Line 4 below zero.⁴ Line 4 combines Lines 2 and 3. Line 5 multiplies Line 4 by 20% to give you your QBI component.

Lines 6 Through 9: REIT Dividends and PTP Income

Line 6 captures qualified REIT dividends and publicly traded partnership income or loss for the year. Line 7 brings in any REIT/PTP loss carryforward from a prior year. Line 8 combines the two, floored at zero. Line 9 multiplies Line 8 by 20%. This REIT/PTP component is calculated separately from your business QBI, and one cannot offset the other in the same way two businesses can.

Lines 10 Through 15: Applying the Income Limitation

Line 10 adds your QBI component from Line 5 to your REIT/PTP component from Line 9. That is your deduction before the income cap.

The cap is on Lines 11 through 14. Enter your taxable income before the QBI deduction on Line 11. Subtract net capital gain, which includes qualified dividends, on Line 12. Line 13 gives you the difference, and Line 14 multiplies it by 20%.¹

Line 15 is your actual QBI deduction: the smaller of Line 10 or Line 14. Even if 20% of your QBI is a large figure, the deduction cannot exceed 20% of your taxable income after removing net capital gains.

Lines 16 and 17: Loss Carryforwards to Next Year

If your combined QBI across all businesses was negative for the year, Line 16 computes the loss you carry forward to offset QBI in future years. Line 17 does the same for net REIT/PTP losses.⁵ These carryforwards survive even if the business that generated them no longer exists, and they are tracked separately from losses under other tax provisions such as an excess business loss under Section 461(l).

Where the Deduction Goes on Your Return

Transfer Line 15 to Line 13a of Form 1040, 1040-SR, or 1040-NR.⁶ Estates and trusts use Line 20 of Form 1041. The QBI deduction is not itemized. You claim it whether you take the standard deduction or itemize, and nothing about it appears on Schedule A.

Attach the completed Form 8995 to your return. E-filing software handles the attachment for you. Keep your K-1s, supporting schedules, and any aggregation elections with your records in case the IRS asks about the figures.

The $400 Minimum for 2026 Returns

Starting with the 2026 tax year, a minimum deduction applies. If your aggregate QBI from all active qualified trades or businesses in which you materially participate is at least $1,000, your deduction is the greater of $400 or your regular calculated amount. The $400 floor will be adjusted for inflation in future years. Passive interests where you do not materially participate do not count toward the $1,000 threshold. For very small operations or thin-margin businesses, this floor can matter more than the 20% math on the rest of the form.

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Internal Revenue Service. Instructions for Form 8995 (2025)
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Internal Revenue Service. Instructions for Form 8995 (2025) – General Instructions
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Internal Revenue Service. Qualified Business Income Deduction
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Internal Revenue Service. Instructions for Form 8995 (2025) – Line 3
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Internal Revenue Service. Instructions for Form 8995 (2025) – Line 16
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Internal Revenue Service. Instructions for Form 8995 (2025) – Line 15