I am preparing a partnership return for our law firm. How do I fill in the items on Schedule A for each K-1 reqarding QBI pass though reporting.
Is the ordinary business income of each partner that reported on line 1 of his K-1 plus his voluntary Simple IRA retirement payment?
How do I divide up our W-2 wages between the partners?
Items listed on each partner's K-1 flow from Schedule K on page 4 of Form 1065. The totals that appear on Sch K are then transferred to each partner's K-1, according to their assigned percentage. Items related to QBI should be entered on line 20 of Schedule K with codes Z, AA, AB, AC, or AD.
The amount contributed to a partner's IRA goes on Schedule K-1 (Form 1065) box 13 with code R. Since this is reported as a self-employment retirement deduction on your personal tax return, it does not appear as a deduction (or anywhere other than box 13 of the K-1) on the partnership's tax return (Form 1065).
W-2 wages are an expense of the business -- they are not divided up on a partner level.
Thank you, Irene.
The question I have is what is the assigned percentage for the QBI items. If the entire business is qualified business income, can each partner's K-1, line 1 ordinary business income be shown as the ordinary business income of the QBI Schedule A portion of the K-1?
And for W-2 wages do the total partnership W-2 wages appear on each partner's K-1 form, as opposed to allocating portions of these to each partner?