Published by AE Tax Advisors Team • 2026-03-18

Missed QBI Deduction Recovered -- $32,000 Over Three Years

The Client

Tyler Jenkins, an independent graphic designer in Portland, Oregon, earned $145,000 annually from his freelance business. He had been filing his returns with a tax preparation chain for three years.

The Problem

Upon reviewing Tyler's prior returns, we discovered that his tax preparer had never applied the Section 199A Qualified Business Income (QBI) deduction -- a 20% deduction on qualified business income available to pass-through business owners. For three consecutive years, Tyler missed out on approximately $29,000 per year in deductible QBI, resulting in $10,700 per year in excess taxes paid.

Our Strategy

We prepared amended returns (Form 1040-X) for all three tax years, properly calculating and applying the QBI deduction. Tyler's business income qualified for the full 20% deduction because his taxable income was below the phase-out threshold for specified service trades. We also identified $4,200 in missed home office deductions across the three years.

The Results

The three amended returns recovered $32,000 in total overpaid taxes plus interest. Tyler received refund checks within 16 weeks of filing. Going forward, the QBI deduction alone saves him approximately $10,700 per year.

Key Takeaway

The QBI deduction is one of the most commonly missed deductions for self-employed individuals and small business owners. If your prior returns do not show a Section 199A deduction, they may need to be reviewed and amended.