Section 199A Income on K-1

[piepian]

This is the best explanation to solve this problem that I found.  I tried it and it worked.  Thanks very much.

[MaryS12]

How do I do this?   

I tried clicking, putting in zero... even deleted K-1 

BUT IT STILL SHOWS UP ON STATE-CA.... so how do I delete it from State

[MaryS12]

I tried this, too, but and not getting the K- 1 to accept any changes.

[jpcashman]

Perfect.  this helped  Thank you for posting!!

[Raj42]

I called Energy Transfer ET tax package support regarding Statement A and they told me it is not required anymore and it is TurboTax program error and to call TurboTax. I have to file by 15 Oct and I am stuck. How can I call TurboTax and need their phone number  

[tagteam]

What is the TurboTax phone number? (intuit.com)

[kmnapoli1]

Hi

I was wondering if you have a schedule K1 for section 199A income do you take the QBI deduction only for the income of schedule K or do you add the W2 too that you received like salary from the S corp? And if so how do you do that?

Thank you! 

[ThomasM125]

The QBI income and deduction would only apply to the S Corporation income listed on the K-1 schedule. It would not apply to wage income reported on a W-2 form, even if it was associated with the corporation.

[davenj]

I called taxpackagesupport.com, the organization that prepares the K-1s, and asked for more information about 199A.  The representative said "are you using Turbotax?"  I said "yes".  He said "We get the same question all day long from TT users, but this is a Turbotax issue.  Those who do their taxes manually don't need this information." 

[davenj]

The problem is that TT asks for information that is not provided on the K-1s.  I have so far completed 5 K-1s and none of them have the requested information. 

[DianeW777]

TurboTax asks the questions that are required to determine if your qualified business income deduction (QBID) is allowed.  If the company who issued the 1065-K1 cannot answer some of the questions or if they do not provide you with the detail to answer the questions, they are not providing what the IRS requires.  I have placed a screen image below to show the routine questions that must be answered to arrive at your deduction.

Check with the company again if statements were not provided to you for your K1s. They are required to provide the answers to the questions.

• IRS Qualified Business Income Deduction (Check out the FAQs at the bottom of the page as well.)

@davenj

[Edited: 03/21/2022 | 9:48p PST]

[ksb2]

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.

Karl

[mantohop]

I keep getting an error message on section 199A even though there is a number on the form.  where do I find statement A?

[ksb2]

Statement A is typically attached with the K-1 form either as a separate attachment, or included and described in the notes accompanying the K-1 form.  Further the amounts are broken down in K-1 item 20, which are included in the other parts of the K-1.  Within item 20, you will find an item labeled SMTS, which is further broken down into separate items, described within the Statement A or the footnotes.  

What typically causes errors within Turbotax, at least in the past has been where multiple values are shown in boxes 1, 2 and 3.    Where this occurs, the multiple K-1s forms must be completed to avoid the error message.  I see where Turbotax  now asks a question about this, and possibly handles this situation to avoid generating an error message.  However, as I did not have any K-1 of this type, this year, I am not certain how Turbotax handles this situation and generates the separate K-1s automatically. If this is the cause of your error message, contact Turbotax support, directly, to solve it.  There will be additional supporting information that must be completed to overcome the error message. 

If you do a search on my previous postings, from last year, you will find specific information on how to complete the additional information required to correct and complete the information needed to resolve the error message issue.

Hope this information is helpful.

Karl

[goodbarx]

Where do I find statement A to help me fill out #20 code Z. 

0 income is entered on 2 of my K-1's but Turbo Tax will not accept that.  A Statement A did not come with my K-1.  Info in D1 and D2 is also no help, they also have O's