QBI in turbotax business

[ELG home improvement]

I am filling out the form 1065 in turbotax business for a general partnership. They do qualify for the QBI. Should the program be calculating this for me and should it be populating somewhere on the K-1? I did say that yes, the income is QBI eligible and the box is checked on the section 179 carryover form that it takes me to. It's now asking me to enter an amount in section 179 Part II Box A. Does the QBI then just come into play when we do the personal tax in the Home and Business program? This is our first year as a partnership, previously sole proprietor for several years and no problem using the Turbotax self employed program.

Thanks

[tagteam]

The QBI (Section 199A) deduction is on Line 20 of your K-1s with a Z code.

The program should also generate a statement (Statement A) for each partner.

[ThomasM125]

You designate the property as QBI property on your partnership return by checking the box on the 199A Worksheet by Activity worksheet where it says Is this activity a qualified trade/business? 

That will create a code "Z" on line 20 of you K-1 schedule. There will be a statement attached to your K-1 schedule that you will use when you enter your K-1 on your personal tax return to get credit for the QBI.

[ELG home improvement]

There is a line Z on the K-1 but there is no dollar amount next to it. Should this be correct?

Thank you!

[DaveF1006]

@ELG home improvement Is your K1 for an S-Corp, partnership, or trust?

[ELG home improvement]

It's a general partnership. Thanks for getting back to me. Had childcare issues and am just getting back to this

[DianeW777]

Yes, but it may be on a separate statement attachment that provides the details for this box on the Form 1065-K1, as @ThomasM125 indicated.  This seems to be the way most partnerships are reporting the Qualified Business Income Deduction (QBID) information.  Look for the attachments that came with your K1 for the information relative to Code Z, Box 20.

Code Z. Section 199A information. Generally, you may be allowed a deduction of up to 20% of your net qualified business income (QBI) plus 20% of your qualified REIT dividends, also known as section 199A dividends, and qualified PTP income from your partnership. The partnership will provide the information you need to figure your deduction. Use one of these forms to figure your QBI deduction.

• IRS Instructions Form 1065-K1

[ELG home improvement]

so I was able to pull up a printable copy of the K1 information. There is a Statement A - QBI pass-through entity reporting page that list's each partner's portion of the income, with a 0 in Section 199A dividends box (they are listed under 1065, line 22. However, there is not a calculation of the dollar amount that can be claimed as the QBI. 

My question is....should the dollar amount that can be claimed as QBI show as being calculated on the K1 that is distributed to each partner, or is the K1 just stating that the income is QBI eligible, and then the TurboTax home and business that I'll be using to file our personal taxes calculate the actual amount of QBI that can be deducted?

Thank you!

[Mike9241]

each partner looks to their k-1 for QBI info. any QBI info is in box 20 code Z or a supplemental schedule.  

if there is none then there could be a mistake in the K-1 or none of the income is QBI

if this is an investment partnership, then the only likely QBI income that would be reported is certain REIT dividends reported as 199A dividends

[tagteam]

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@ELG home improvement wrote:

There is a Statement A - QBI pass-through entity reporting page that list's each partner's portion of the income, with a 0 in Section 199A dividends box...........

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Did you prepare the 1065 with TurboTax Business?

If so, did you enter a "0" in the Section 199A (REIT) Dividends box (rather than leaving it blank)? That would be one way you would get a "0" in the Section 199A dividends box on Statement A.

[ELG home improvement]

I am using TT business to do the 1065 and K1s. Before I finalized the forms I wanted to make sure that I had everything right. I did remember reading that in order to take the QBI there had to be something documented on the K1 which is why I was checking to make sure that was correct before finalizing and transmitting
What I'm not 100% about from the answers I've gotten is whether the actual 20% QBI will be calculated and documented on the k1 itself, or if it just needs to have the Z designation on that line and then the TT home and business program I'll be using the file our personal taxes will do that calculation there.

[ELG home improvement]

This isn't an investment partnership. It's 2 guys with their tools who combined their contractor sole proprietorships this year.

They are a small company, so they do end up drawing out their profit as they earn it.

I did mark that the income was QBI eligible, and know that there needs to be something on the K1 in order for them to be able to take the QBI deduction. What I am unclear about is whether the 20% should already be calculated and showing with a dollar value on the k1 or if it's just the Z that needs to be in box 20.

The only fields that are showing with numbers on the k1 itself are the ordinary business income and self employment earnings, as well as the distributions. Then, in box 20 I've got an A, E, N and Z there, with only a number 1 next to the A

On the statement A that is attached, the ordinary business income is populated, other income is appropriately populated and there is a 0 in the W2 wages box (neither of them have other W2 jobs) and a 0 in the Section 199A dividends box. 

[tagteam]

Everything should appear on the statement (Statement A).

The K-1s should have a Z code on Line 20 and "STMT" in the box where a figure usually appears.

[ZoltanB45]

In addition to what was already mentioned, the amount of deduction won't be determined until you prepare your 1040, as there are phaseouts to this deduction.

In tax year 2021, the phaseout begins at $340,100 for married couples filing jointly, $170,050 for married individuals filing separately, and $170,050 for all others. It ends at $440,100 for married couples filing jointly, $220,050 for married individuals filing separately, and $220,050 for all others. 

[ELG home improvement]

THANK YOU!!!! I was trying to determine if the K1 should have the 20% calculated on there or if it's just the "Z" code in box 20.