I have a question about claiming all Schedule E expenses I have available and the QBI / 199A Deduction. Specifically, is there a requirement to claim all expenses?
Why I ask:
In filling out my 2019 return, I added all my income areas (W-2, Div, including 1099s from the four rental properties I have) and observed in Turbo Tax's estimate window that I was getting a very small return. (That was fine). However; once I got to the Schedule E areas and started putting in my expenses - mortgage interest, property manager fee, repairs, cleaning, etc + depreciation - I noticed the estimate window changed to indicate "tax due" and kept getting larger with every expense I added. ??! This did not make sense to me. I have reviewed the posts on the Section 199/QBI and I seem to qualify for that.
Normally, my rentals breakeven or have a small paper loss after depreciation is added. I reviewed my 2018 return and had a small QBI. With all my expenses included, I have an even smaller QBI for 2019. If I remove e v e r y expense (incl mortgage interest and depreciation), leaving just the income reported, I get a great QBI deduction and a very small refund on my federal return. If I claim all expenses I owe $3K.
Any insights out there? Thanks!
