The Information needed is typically provided in Box 20 of your K-1 form. You may find it listed as SMTS, which refers you to supplemental information Statement A, or simply to the footnotes on the following pages accompanying the K-1 form.
What are SEC 199A dividends?
Similar to regular dividends, Section 199A dividends take some amount of capital from a company’s equity and redistribute it to shareholders based on the number of shares they possess. 199A dividends, however, are typically only paid out by REITs and funds holding REITs, and therefore receive special treatment in the world of tax.
Thus to receive a 199A tax reduction you must be invested in a REIT or similar business that invests in Real Estate, Farming, or another special Qualified Business as defined in the IRS K-1 instructions.
Sec. 199A defines a qualified trade or business by exclusion; every trade or business is qualified, other than:
The first prohibition prevents an employee from claiming a 20% deduction against his or her wage income.
An example: A is an employee, but not an owner, of a qualified business.
Section 199A Dividends: These dividends are reported on Form 8995 or Form 8995-A and are eligible for the tax rate reduction.
Section 199A QBI or Qualified Business Income deduction if they are reported on Form 8995 or Form
8995-A. In addition to reducing taxable income, this deduction does not reduce adjusted gross income.
Box 1a ordinary dividends are divided into sections 199A and 199B. This is the portion of the dividends reported in Box 1a, that qualify for a 20% tax reduction.
Using Turbo Tax, after completing or downloading the information from https://www.taxpackagessupport.com/ (add YOUR Reporting K-1 Firm, here). Then using File Import for TXT file type of the information downloaded from this site will import your K-! directly into Turbo Tax.
You may also download the full Partner's Instructions for Schedule K-1 (form 1065 - Business Tax Return) at website link www.irs.gov.
The K-1 instructions will warn that 199A rules are complex and recommend that you consult with your tax advisor, if you have any questions. Using Turbo Tax, you may avail yourself of a professional tax advisor offered by Turbo Tax, usually free of charge, or you may call the IRS for their tax assistance.
I have prepared my own taxes with the assistance of a Tubotax advisor, using the above free services.
If still in doubt, either call them or write back for a reply.
