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Level 3
posted Feb 18, 2021 5:33:47 AM

How Do I Indicate that My Business is a "Qualified Trade or Business"?

I asked my accountant to review my S-Corp return and he told me I should check a box in TurboTax to indicate that my business is a "Qualified Trade or Business".  He said this would add important information to my K-1.

 

I don't see a way to do this in TurboTax Business.  How do I indicate that my business is a qualified trade or business?

0 4 710
4 Replies
Expert Alumni
Feb 18, 2021 8:06:46 AM

If you were self-employed or a small business, you probably qualify for the qualified business income (QBI) deduction. We'll automatically ask and determine if you qualify and how large the deduction is when you enter your K-1.

 

Generally, your K-1 will have a code V in Box 17 so you don't miss out on a potentially valuable qualified business income (QBI) deduction. Since your K-1 reports income that's often eligible for this deduction, you should double-check Box 17 for a code V.

 

  • Note :If you received a Statement A for QBI Reporting info with your K-1, answer Yes even if you don't have code V in Box 17.

 

Here's how to find out if you qualify:

  1. Open or continue your return.
  2. Select Federal on the left, and then Deductions & Credits near the top.
  3. Scroll down and select Wrap up tax breaks.
  4. Now proceed through any screens. If you qualify, you’ll see a screen that shows the exact amount of your QBI deduction.

Important: While you can do this search at anytime, you'll get the most accurate answer if you've entered all your income and other deductions as the qualified business income deduction is based on several parts of your return. However, we recalculate if you change anything or add more info, and the steps above will always give your current status.

 

  • If you’d like to know more about the qualified business income deduction and how it’s calculated, we’ve got more information about it.

 

The Qualified Business Income deduction (also called the QBI deduction, pass-through deduction, or section 199A deduction) was created by the 2017 Tax Cuts and Jobs Act (TCJA) and is in effect for tax years 2018 through 2025.

 

  • With the QBI deduction, most self-employed taxpayers and small business owners can exclude up to 20% of their qualified business income from federal income tax (but not self-employment tax) whether they itemize or not.

Level 3
Feb 18, 2021 8:33:40 AM

When I do my S-Corp taxes in TurboTax Business, is there any way to get TurboTax Business to add this code to the K-1?

Expert Alumni
Feb 18, 2021 9:46:13 AM

Yes, navigate ;to the Federal Taxes tab, Other link, Tax Credits and Other Info screen will allow you to access screens where you will be able to indicate your business is a Qualified Trade or Business. 

 

  

Level 3
Feb 18, 2021 12:47:41 PM

That worked fine.  Thank you.  TurboTax Business now puts a "V" on line 17 of the K-1 and puts "STMT" in the amount field.

 

I'm a little confused as to how I enter this K-1 information on my personal taxes in Turbotax.  I put a "V" in line 17 of the K-1 in my personal taxes and it marked it in red.  I presume that indicattes some kind of error.  I'm not sure what to put in the amount field on line 17 of K-1 on my personal tax return.