For Tax Year 2020, I had a routine 1099 that including Section 199A dividends (Qualified Business Income Deduction) in the amount of around $700. Turbotax filled out form 8995-A and granted a deduction on my 1040. The IRS said that I wasn't entitled to the deduction because my income was too high, but the only reason my income was high is because of a large capital gain which Turbotax excluded from the income calculation. I have no idea if Turbotax is right or the IRS is right. There are no applicable instructions in the IRS documentation for whether excluding capital gains from income for this calculation is appropriate. The temptation to just send the IRS a check is pretty strong, but TT normally doesn't make calculation errors like this. Any suggestions?
