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TC business taxes · section 199AThe QBI deduction for transaction coordinators and real estate agents

Owners of sole proprietorships, partnerships and S corporations may be able to deduct up to 20 percent of their qualified business income (QBI) – the section 199A deduction – whether they itemize or take the standard deduction. A self-employed TC's Schedule C profit is QBI; wages as an employee are not, and neither is reasonable compensation an S corporation pays its owner. The deduction is limited to 20 percent of taxable income minus net capital gain, and at higher incomes it can depend on the type of business and on W-2 wages and property. One limit concerns "specified service" businesses, which include brokerage services – but the IRS regulation defines brokerage services as arranging securities trades and says it does not include services provided by real estate agents and brokers (26 CFR 1.199A-5(b)(2)(x)). For tax years beginning after 2025 there is also a minimum deduction for active QBI.

The basics (irs.gov)

  1. Up to 20%

    Of qualified business income from a sole proprietorship, partnership, S corporation, trust or estate.

  2. No itemizing needed

    Available with the standard deduction or itemized deductions.

  3. Not QBI

    Employee wages, S corporation reasonable compensation, partnership guaranteed payments, capital gains.

  4. Overall limit

    Not more than 20% of taxable income minus net capital gain; after 2025, at least the minimum deduction for active QBI.

Real estate and the specified service rule

  • Brokerage services, for this rule, means arranging transactions in securities for a commission or fee (26 CFR 1.199A-5(b)(2)(x)).
  • The regulation says it does not include services provided by real estate agents and brokers.
  • QBI is figured after the deductible part of self-employment tax, self-employed health insurance and retirement plan contributions.

Where TCs go wrong

  • Assuming a TC paid on a W-2 by a brokerage gets it – employee wages are not QBI.
  • Forgetting that SEP contributions and the self-employment tax deduction reduce QBI.
  • Higher incomes bring extra limits – Form 8995-A and a tax professional.

Questions TCs and agents ask

Do real estate agents qualify for the QBI deduction?

Self-employed agents can. IRS regulations say the "brokerage services" specified service field does not include services provided by real estate agents and brokers (26 CFR 1.199A-5(b)(2)(x)).

Can a 1099 transaction coordinator take the QBI deduction?

A self-employed TC's net business income is generally qualified business income, so up to 20% may be deductible, subject to the taxable income limits.

Do I have to itemize to get the QBI deduction?

No. It is available whether you itemize or take the standard deduction (irs.gov).

Related guides

ClosingCode keeps your TC income and expenses by Schedule C line all year, so your Schedule C profit – the starting point for QBI – is one number away.

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Sources (read October 25, 2026): irs.gov "Qualified business income deduction"; 26 CFR 1.199A-5(b)(2)(x) (eCFR).

General information, not tax advice. ClosingCode is software; it is not a tax preparer, CPA or financial adviser. This guide is not a substitute for the advice or services of an attorney.