Tax Year Prior to 2020: How do I remove a qualified business income deduction? I don't have a K-1 to delete and I can't find the QBI anywhere.

[1948biddle]

I have no way of knowing that. As it stands right now, TT says I can't file my taxes. I got a window that said "It looks like some of your tax forms aren't ready. It turns out some areas aren't yet ready for your specific tax situation. If you sign up for email notifications, we'll let you know as soon as your forms are ready: Form 8995A - Qualified Business Income Deduction. Available to file 2/20/20".  It would appear that I am left with a choice of deleting the value in box 5 and filing my taxes or not filing my taxes until TT gets its act together.

[1948biddle]

Box 5 is only $75 so I can't imagine it increasing my tax liability very much. My concern is that if I am ever audited, the IRS might be displeased with me for delegating it.

[VictorW9]

Qualified business deduction can occur with a schedule C or a schedule E. So, it doesn't really have to be with a K-1.

[1948biddle]

I don't have a schedule C or E. There is no K-1. Fidelity put $75 in 1099-DIV box 5. I called them and asked why. They don't know why there is a value in box 5. Their best guess is because it is a S&P 500 index fund and maybe one of the investments within the 500 is in real estate. 

[VictorW9]

No, this amount is actually a share of expenses of a non publicly offered mutual fund. If you itemize, you may have been able to deduct these expenses on your schedule A subject to the 2% limit that went away under the new Tax Cuts and Jobs act.

[Hollyr]

I opened the Form and deleted the number in the box; it was like $56 for Reit dividend. 

[VictorW9]

Curious. What happened when you did that? The QBI went away?

[Todd W]

Exactly what I needed.  Thanks!

[Hollyr]

VictorW9, yes it did.

[Hyacinth]

Hi,

I have this same problem with Fidelity and Vanguard statements.  I can't imagine why this income would be declared on the QBI deduction summary which seems to be related to small businesses.  My concern is that Turbotax may be calculating this incorrectly and I am claiming a deduction that we're not entitled to.  This has never happened previously on Turbotax and I have not changed my mix of Vanguard investments from last year.  Turbotax, could you please take a look at this?  

[DavidS127]

You can get QBI from a Section 199A dividend reported in box 5 of a 1099-DIV, which is typically included along with your Form 1099-B.  

Box 5 on 1099-DIV is for "qualified REIT dividends paid by a REIT or section 199A dividends paid by a RIC".  If these came from an RIC, they are a pass-through of qualified REIT dividends received by the RIC as a conduit.

@Hyacinth

[hillelw]

Don't do it! I was going in circles too, but eventually figured it out - at least in my case - and it may appropriate be your case too.

I checked my 1099-DIV and found entries for 199A dividends, and they added up to amount on which the 20 percent credit was calculated. (Surprise!)

These 199A dividends are tracked by the companies you own stock in and then by the mutual fund and eventually your broker, etc. -- and what they provide to you on your 1099-DIV can be relied upon IMHO. In June 2020, the IRS issued final regulations allowing Regulated Investment Companies (RICs, aka mutual funds) that own interests in publicly traded partnerships or real estate investment trusts to "pay dividends that a shareholder in the RIC may treat in the same manner (or a similar manner) as the shareholder would treat the underlying item of income or gain if the shareholder realized it directly. " Fair is fair!  (See the Federal Register of June 25, 2020.) (Note: similar proposed regulations issued for earlier years may also be relied on.)

In my case the 199A dividends were paid by large-cap companies in a Fortune 500 index fund. I don't know which Fortune 500 companies pay 199A dividends, but in general you would be surprised how large pass-through entities can get.

You are paying tax on these dividends, so you might as well take the credit you are entitled to.

It would be good if TT and the brokerages made it easier to figure this out. I imported my 1099-DIV from the brokerage directly into TT and it was not flagged in any way. You can click around in vain on TT's "Qualified Business Income Deduction Summary" trying to determine the source of the income and connect it to the concept of 199A. There should be a link back to the relevant 1099-DIVs as-imported and -displayed in TT, but there isn't. If you know to look for 199A income you will notice an explanation attached to box 5, but neither TT's form 8995A nor the QBI Deduction Summary mention 199A.

Finally, TT's forms transfer information from the 1099-DIVs as if the source was a REIT, when all my 1099-DIV says is "Sec. 199A," with out distinction as to source (as between a REIT or a PTP).

[JamesG1]

The Qualified Business Income Deduction can be generated from one of two components. 

• The QBI component can result from a sole proprietorship, partnership, S corporation, trust or estate.  The first component would likely be reported on Schedule C, Schedule E, Schedule F or a K-1.
• The REIT / PTP component can be generated from qualified real estate investment trust (REIT) dividends or qualified publicly traded partnership (PTP) income.  The second component could be reported on 1099-DIV or a K-1.  See box 5 of the 1099-DIV.

See also this TurboTax Help.