topic Qualified Business Income Deduction in Deductions & credits

Qualified Business Income Deduction

snester24 — Sat, 28 Mar 2020 21:15:56 GMT

My rental income is received through a trust. I am trying to get the QBI deduction on my individual return but TurboTax is requiring me to enter the rental income on my personal return. How do I get the QBI deduction without entering the rental income twice (i.e. once on trust return and once on personal return)?

Re: Qualified Business Income Deduction

KarenM90 — Sat, 28 Mar 2020 21:39:14 GMT

Rental properties are usually treated as passive activities, and passive activities are excluded from the definition of a qualified trade or business.

However, rentals that qualify as trades or businesses (generally Real Estate Professionals) under IRC § 162 are not considered passive, which means they could potentially qualify for the QBI deduction.

Here is a Turbo Article related to QBI for Rental Income: QBI on Rental Income

Re: Qualified Business Income Deduction

snester24 — Sat, 04 Apr 2020 00:04:10 GMT

Thanks Karen!

I read the article related to QBI on Rental Income and we would qualify for the QBI deduction (via the Everybody Else, subheading).

Do you have any knowledge as to how we would recognize the deduction on a 1040 in TurboTax without recognizing the income (as it is already recognized on the trust return)?

Re: Qualified Business Income Deduction

DavidS127 — Sat, 04 Apr 2020 12:30:04 GMT

You recognize your QBI deduction from a trust, without recognizing additional income on the Form 1040, via the entries you make in TurboTax for the box 14 code I (as in India) Section 199A information that came with your Form 1041 Schedule K-1.

You'll need to put the information on each of the K-1 statements into the categories shown in the "We need some information about your 199A income or loss" and "Let's check for some uncommon adjustments" screens (see two screenshots later in this post).

To get back to the K-1 summary screen and find the Schedule K-1 to edit, click the "magnifying glass Search" icon on the top row, enter "k-1" in the search window and press return or enter, and then click on the "Jump to k-1" link to find the K-1 you need to edit.

Here are screenshots for the "We need some information about your 199A income or loss" and "Let's check for some uncommon adjustments" screens where you enter the information from your K-1:

Re: Qualified Business Income Deduction

snester24 — Sat, 04 Apr 2020 19:55:48 GMT

Form 1065 was issued to a trust for which I am the trustee. I did not receive a form 1041. Sorry for not being clear. How would your answer change with this new information?

Re: Qualified Business Income Deduction

DavidS127 — Sun, 05 Apr 2020 12:07:43 GMT

As you pointed out, the instructions and screenshots for entering a K-1 with line 20, code Z earlier in this "thread" are for the TurboTax individual tax return (Form 1040) products. The entry of a K-1 received from a partnership for a trust preparing Form 1041 will be different.

For a K-1 received by a trust preparing Form 1041, go to Forms mode (icon at top right in blue bar) and in the left column find the "K-1 Partner" form for the K-1 the trust received. Click on that K-1 Partner form and it will open up in the window. Scroll down to Section B1 and in the applicable boxes enter the information on the "box 20 code Z Section 199A Statement or "STMT" that came with that K-1.

@snester24