Business Income not showing on 8995-A

[dhfishin]

In 2023 my small business income showed on form 8995.  This year, it is not showing on the 8995-A (Income over the 8995 limit).  My business qualified last year as a qualified trade or business and the business has not changed. The net income from my business should be considered QBI, and should be on form 8995-A

[Shannon B1]

The QBI deduction amount depends on your total taxable income, which includes wages, interest, capital gains, and other income, in addition to income from your business. If your taxable income reaches or exceeds $191,950 (or $383,900 if filing jointly), the deduction may be reduced or eliminated, depending on the nature of your business.  Here's a TurboTax Help Article that explains more on this topic.

[dhfishin]

How does Turbotax determine that my business is an SSTB?  The IRS general definition is "the principal asset is the reputation or skill of one or more of its employees or owners".  This is not the case for my business. Turbotax seems to think my business is an SSTB. How do I change that?

[Shannon B1]

The "work description" you provide for your business determines its business code. TurboTax automatically assigns this code based on your description, and the IRS uses it to determine your SSTB (Specified Service Trade or Business) status.

Here’s how to change your business "work description" in TurboTax:

1. Open or continue your tax return.
2. Go to the Schedule C section:
   • TurboTax Online/Mobile: Go to Schedule C.
   • TurboTax Desktop: Search for Schedule C and click the "Jump to" link.
3. Answer any business questions until you reach the "Your self-employed work summary" screen.
4. Select "Edit" or "Review" next to your business.
5. On the "Here’s your business info" screen, scroll down to the "Business summary" section.
6. Click "Edit" next to "Your business info" and change the "work description" of your business. This will automatically update the business code.

[dhfishin]

I changed it to a Work Description of Business Management Services, and a work industry of Office Administration. Business code shows 541510, which doesn't seem accurate, but I don't see how to change that.. Still not showing on 8995-A.  

[Shannon B1]

Here are some additional steps to help resolve this issue with your Form 8995A not populating:

1. Double-Check Your Answers:
   • Go to the "qualified business income" section under Business Summary and review your answers. Use the steps provided earlier for changing your work description for guidance.
2. Net Profit:
   • Does your business have a net profit for 2024? If not, you don't qualify for Qualified Business Income (QBI).
3. SSTB Check:
   • Is your new "work description" still considered a Specified Service Trade or Business (SSTB)? Here is a more complete list of SSTB business types.
4. Taxable Income:
   • If your taxable income is $191,950 or more (or $383,900 if filing jointly), the deduction may be reduced or eliminated.

[dhfishin]

I deleted the business, and then added it from scratch. Same results. 

[BrittanyS]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

@dhfishin 
 

[dhfishin]

Token 1274520

[DawnC]

I looked at your token file and see you have the rental property marked as not an SSTB, but your Schedule C is marked as an SSTB.   You can change this on the Schedule C.    You can go back through the interview or you can change it in Forms mode if you are using the desktop.   On the Schedule C, scroll down to the Qualified Business Income Deduction Smart Worksheet and mark NO on D1 and D2.    That gets your business to qualify for QBI.   

Second thing:  Since your taxable income is over $241,950 (and SSTBs don't qualify), the deduction is either A or B, whichever is less:

• A = 50% of the business's W-2 wages paid (or 25% of the W-2 wages paid plus 2.5% of the business's unadjusted basis in all qualified property(UBIA)), whichever one is the greater amount
• B = 20% of QBI

See calculation in this TurboTax FAQ.    Your rental has a loss and no W-2 wages and the business has no W-2 wages or UBIA, so in the calculation above, A is going to be $0, so your QBI deduction is $0 (the lesser of A or B) for both activities.     You can choose to aggregate the 2 activities, if you qualify to, to get a QBI deduction of $2585.   By combining them, you can use UBIA of the rental. 

Should I Aggregate?  Review this article and make sure you want to do this.   If you aggregate this year, you must continue to aggregate in all future years.   

[dhfishin]

I am using the online version of Turbotax, otherwise the Forms mode sounds ideal. I don't see which of my answers under the interview for the Schedule C business is causing it to not show up as QBI. Can you tell which answer is causing this?

Also, I don't believe my Schedule E income qualifies as QBI, but it is showing up on the 8995-A. I'm not sure which of the answers for my rental property is causing it to be on the 8995-A, and how to not have it be there.

[MaryK4]

For TurboTax Online, the NAICS code you entered 561110 Office Administrative Services is a SSTB so the Specified Service Trades or Business Rules applied, and you had no W2 wages (since it is self-employment).  In TurboTax Online, you do not have the option to make the change to the business code. (There used to be a question on if it was a SSTB, but now it is based on the NAICS you enter).  .

For the Vacation Rental, you can go back to the Schedule E entry and you will see the Qualified Business Income on the Summary page.  You can edit to indicate it is not QBI.

@dhfishin