Hello All,
Please note that this answer is only valid if your K-1 came from an S Corp and you do not file a Schedule C. Through a lot of research and debugging I discovered that in this case TT will only handle the 20% QBI/199A deduction if your K-1 specifically (and correctly) reports 199A information on Line 17 with a Code V (Section 199A income) entry. If that exists then you will be presented with other interview questions on the subject and eventually your QBI/199A deduction will be calculated and propagated to 1040, Line 9. But what if your K-1 didn’t specifically list your 199A income, as mine didn’t? In that case TT just assumes that you don’t have 199A income and you won’t be asked anything about it EVEN THOUGH one of the hidden interview questions allows you to enter 199A info that was not reported on K-1. Obviously this is a bug in TT. EVERYONE should be asked this question whether there was 199A info on the K-1 or not.
Disclaimer: This method worked for me and it seems to be correct for my limited case. I’m just grasping at straws trying to work around this bug so I can get my return filed. This isn’t the “right” way to handle this problem. The “right” way would be for Intuit to fix it or the K-1 to be corrected to show the 199A information. Proceed with caution and double check that you get expected results. Also, my taxable income isn’t over $315k so I could skip other interview screens for more complicated cases. If your income is over the threshold then you probably should try entering your QBI value on Line 17 of your K-1 with Code V and see what happens on the low-level forms. This isn’t 100% correct and I wouldn’t recommend filing a return with a K-1 that isn’t 100% correct. This is how I ultimately devised this workaround and it may work for you, too. You’ve been warned!
Anyway... IF you had a Code V value on K-1, Line 17 you would see these additional 199A-specific interview screens:
Screen 1: Name and employer 10 number for the business
Since Section 199A Income is reported in 17 of this K-1, we need the name and employer ID number (also known as “EIN" or "tax ID number") for the business that generated this income.
Business name ___________
EIN of business _________
Note: Section 199A income from an S Corporation reported on a Schedule K-1 may be generated by the S Corporation or by a separate business owned by the S Corporation. If it comes from a separate business, enter the name and EIN of that business here.
Screen 2: Let's check for some uncommon adjustments
Certain uncommon items are typically not included in the Section 199A Income reported in Box 17 of your K-1. They should be included in a statement with your K-1, and you can enter them here so we can accurately calculate your Qualified Business Income (QBI) deduction (also known as "Section 199A” deduction).
O This business has short term gains (losses) f rom the sale of business assets that are not already included in the Section 199A Income reported in Box 17
O This business has Section 1231 gains (losses) from qualified business assets
O This business received qualified cooperative payments
X This business has other qualified business expenses not reported with Section 199A Income (learn more)
Other qualified business expenses __________
O None of these apply
-------------
If you click on “learn more” for the “Other qualified business expenses” option you get this information. The big clue is the last paragraph.
Other qualified business expenses not reported with Section 199A Income
There are a few rare expenses that may affect the Qualified Business Income (QBI) deduction (also called Section 199A deduction). If you have Section 59(e)(2) expenses, unreimbursed partnership expenses, depletion expenses, or any other business expense allocable to QBI which was not included in the Section 199A Income reported on Schedule K-1, those may be entered here if you want to include them to reduce your QBI eligible for the deduction.
Note that anything entered here is subtracted from the starting QBI amount. If you believe additional income items should have been included in the reported Section 199A Income on Schedule K-1, you may include that amount here as a negative number.
--------------------------------
SO... here’s how I was able to get my QBI information entered into TT without incorrectly reporting what's on my K-1, AND have TT calculate the QBI deduction and propagate the value to 1040 Line 9.
- If you’ve already entered your K-1 I would suggest deleting it and re-entering it. A couple of times during debugging things didn’t get updated throughout the return if the K-1 changed too radically. I never had a problem if I started with a fresh K-1.
- Enter the K-1 using the Interview. Since it doesn’t have a Code V entry on Line 17 you won’t see any interview questions regarding QBI/199A. Don't worry about it, we'll get to that later.
- Open the K-1 Form for direct editing.
- Go down to K-1, Page 6 - Section D: Qualified Business Income Deduction Info.
- On Line A: Does this K-1 include a Section 199A business? Check Yes.
This should fill in Section D with 0’s
Per the instructions that you never saw since the interview never asked if the business qualifies for the deduction...
- On Line E,2,d: Other non-qualified items to subtract from business income enter the NEGATIVE amount of QBI you are claiming.
e.g. if your QBI is $10,000 then enter -10,000. on this line.
The form will get filled out for you. While I was debugging I sometimes had to double-click on Line K "QBI worksheet to report, double click to link" and enter my official company name so that all of the supporting worksheets and links would be set up and the deduction propagated to 1040 Line 9.
Good luck. Hope this helps others get around this bug. Seems there's always a new problem in TT every year that causes me to loose a couple of days and a lot of brain cells.
~ Number 6
