For starters,That "refund/amount due? number has absolutely no meaning to you until after you have completed your return it it's entirety and are ready to file it. This is especially true if you are using the online self-employed version, or the desktop Home & Business version. With those versions you are entering your business income/expenses first, and for many that's barely the "tip of the iceburg" on their income and you haven't even touched deductions yet.
Therefore that number at the top of your screen that shows your refund amount or tax due amount means *ABSOLUTELY* *NOTHING*. In the process of completing the return that number will be *all* *over* *the* *place*. That's because the program can only work with the information that *you* *personally* have entered into the program at *this* *specific* *point* *in* *time*. So until you have entered all of your data and completed the program in it's entirety, there is no way possible that number is going to be correct.
You need to ignore it completely until you have worked through the entire program and are ready to file.
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
With four rental properties, it is perfectly possible that you qualify for the QBI, but probably "just barely". I myself have three rental properties and I don't come anywhere close to having the 250 hours of "direct involvement" in managing my three properties, even with all three lumped together. In fact, I can't even break 100 hours in a year - and that includes when I did all the turn-around work myself on one property to prepare it for the next renter, between renters.
By law, you are required to claim all business expenses. But like I said above, you can probably "get away with" not claiming some of them. By not claiming expenses for the purpose of reducing your tax liability, that's a sure fire way to raise flags and get audited. Those you can't get away with:
- You are required by law to depreciate any asset that is utilized on a recurring basis in the production of income. Your rental property and all property improvements are "in fact" used on a recurring basis to produce income. Therefore you have to depreciate them.
- If you have a mortgage on the property and you do NOT claim the mortgage interest, that's a sure fire flag raiser. Especially since the lender reported your interest income to the IRS as they are required to do by law.
- There is no question that you paid property taxes. So that's another flag raiser with the IRS if you don't claim them.
- If you have other expenses that you have been claiming on a consistent basis in past years, and then those expenses "suddenly" disappear, I don't know what the probability is the IRS will question it, or if it will even raise flags. But I can't definitively say it won't raise flags.
Finally, if the IRS has reason to suspect you are filing what "could" be interpreted as a fraudulent return (that would be with intent for defraud the IRS), then the IRS can audit all of your tax returns back as far as they desire under the auspices of suspected intentional fraud. Don't go there.
