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posted Feb 20, 2020 10:01:41 AM

QBI deduction if there is no business.

Turbotax generated form 8995 for QBI, to get a QBI deduction, apparently because of my selling some mutual fund share and a short term capital gain loss ($7). I don't have a business and it would seem that this loss doesn't qualify for a QBI deduction as it is tied to a capital gain loss. It is listed on the form 8995 as Qualified REIT Dividends - $7. Should this form have been generated or did TurboTax make a mistake? Any help would be great.

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6 Replies
Expert Alumni
Feb 20, 2020 10:35:54 AM

I tested this and a short term gain or loss did not trigger Form 8995 for me. There are other types of income that can trigger a QBI deduction:

 

In addition to a traditional business, QBI is also:

  • Qualified REIT dividends.
  • Qualified PTP income or loss.
  • Income from K-1 forms.
  • Rental income, if certain requirements are met.
  • Royalties

Level 3
Feb 23, 2020 8:11:04 AM

I have the same thing. It's shown up for the last two years, and I can't figure it out. I'm doing my mom's taxes, using my Home&Business TT. The system is drawing into the QBI form a REIT dividend of over $4000, but she doesn't show anything on her brokerage account that ties to it. Where is this coming from, and should I delete the data and the form. She's 96 years old, and clearly has no business, nor the other possible reasons she'd have a REIT dividend.

Expert Alumni
Feb 23, 2020 9:48:00 AM

Look at any 1099-Div's you might have. Look for an amount in box 5. This amount also pulls to the QBI calculation.

Level 3
Feb 23, 2020 9:50:59 AM

Thanks, JosephF8.

 

I found that line and the number, but I have no idea where TT is finding it. No such amount is listed on my 1099s. If the REIT is buried within a mutual fund or some such thing, how does TT know it exists if my broker and my 1099 don't show it?

Expert Alumni
Feb 23, 2020 10:20:30 AM

Do you have a K-1(1065) with some amount in box 20. Perhaps a K-1(1120S) with an amount in box 17?

 

Level 3
Feb 24, 2020 4:49:21 AM

No, I don't have any of those.

 

I think this is happening because I'm using my TT Home & Business to do my mom's taxes. TT is somehow pulling a value from her dividends and applying the deduction because it thinks the filer owns a business, even though there are no business-related schedules included in the return. This is a tad of a glitch in the software, to me, since I can file up to 5 returns using the TT I purchased. They should be able to be personal returns as well as small business/self-employed returns.

 

I have deleted the value on line 5 of the 1099-DIV and it deletes the info on form 8995 and then removes the QBI deduction form.