QBI Deduction Not Deserved?

Look at your 1099-DIV.  You probably have an amount in Box 5 which will trigger the QBI and is correct.

I have the same issue.  I am NOT self employed and the REIT deduction is $10.  Big deal.  Would rather file now and not claim the $10 with the added forms and hassle.  So how do I edit the 1040 using TurboTax and remove the deduction?

I suspect that the REIT is qualifying you for the 199A deduction. 

REIT dividends generally are reported on a Schedule K-1 or in box 5 of a 1099-DIV.

It is possible that if you remove the entry, that the IRS may question you at a later time about the income.

IRS form 8995-A may be available in TurboTax on February 20, 2020.  See availability here.

never mind.  saw in another thread that you just amend the 1099 DIV to eliminate the breakout of 199A and it's good to go.  sorry for the intrusion.

If the amount is in box 5 of a 1099-DIV you can just delete it.  Since that amount is included in Box 1 your tax liability will be unaffected by deleting Box 5 but of course you won’t be getting the small advantage of the QBI. 

Thank you very much for the information!  Good to know that the amounts in Box 5 of the 1099-DIV is already included in Box 1 of same form.  May I ask what is the small advantage of the QBI if deleting Box 5 amounts does not affect the tax liability?

Thank you.  Yes, there were REIT mutual funds present so that must explain why Box 5 has income.  The confusion lies in the QBI (Qualified Business Income) as I have no business income, just mutual fund income.

The Qualified Business Income Deduction was approved for the 2018 tax season.  We generally think of it in terms of self-employment income but REIT dividends do qualify.

Just delete the amount in box 5 and see what difference it makes to your bottom line.

See this IRS press release under What is the Qualified  Business Income Deduction?

"This deduction, created by the 2017 Tax Cuts and Jobs Act, allows non-corporate taxpayers to deduct up to 20 percent of their QBI, plus 20% of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income."

I am also retired with no operating business.  A 1099-DIV I received reflected a Section 199A dividend and Turbotax Premier automatically generated a 20% deduction on the amount.  With no operating business, I too am skeptical as to eligibility to receive this deduction.  Did you get an answer to that part of your original question - ie. eligibility if not operating a business, only holding investments (e.g. mutual funds) that generate 199A dividends reported in box 5?  

If you have no business but merely are owner of a mutual fund that generates these qualifying dividends, can you take the deduction?

Yes.  Many times you qualify for the QBI deduction because of your investments.

the answers I received were very deliberate in their wording such as 'may qualify for deduction' or 'many mutual funds qualify'.

I personally chose not to claim the deduction because of the lack of a "definitive" answer specific to me.

I understand your concern and I sympathize.  How do you go about the TurboTax process of not taking the deduction?  If you zero out the Section 199A dividends, doesn't this equate to not reporting income that has been reported?

If you have 199A dividends you are entitled to the deduction.  The IRS says:

"Many owners of sole proprietorships, partnerships, S corporations and some trusts and estates may be eligible for a qualified business income (QBI) deduction – also called Section 199A – for tax years beginning after December 31, 2017. The deduction allows eligible taxpayers to deduct up to 20 percent of their qualified business income (QBI), plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income."

Please see full text at:   IRS Qualified Business Income Deduction

@GCLC No. The amount in Box 5 is already included in the amount you reported in Box 1. 

thanks for confirming.  Yes.  the box 5 is just a 'descriptor' of that portion already reported.

as for being 'entitled' because of a reference to a paragraph that I 'may be eligible' and 'if I am eligible' still does not convince me to change my return.  Who knows, maybe in the distant future, our legislature will write tax code in plain (to the point) English.

Do I need to do an amended return if Box 5 on 1099 Dividend trigged a QBI or will the end result be the same?

No, don't amend your return if Box 5 on 1099 DIV triggered a QBI.  You probably have something else on your return that made you eligible, and the end result will be the same.

Here is a TurboTax article about the QBI deduction.

@cohoelprd

No need to amend since the return is correct. An amount in Box 5 of a 1099-DIV gives you the QBI legitimately. 

According to the qualifying taxpayer flow charts  on Turbo tax and the IRS website as of Feb 2022,  we do not qualify for a QBI deduction but I can’t get rid of it. 
We have an entry in box 5 of our 1099-Div but, according to the notes on the form, that doesn’t mean we are automatically entitled to the deduction.  The entry in box 5 is not associated with an REIT fund.  We are not a business of any kind, nor is it a trust or estate filing. I am not comfortable taking the deduction even though it is small. My signature signifies that the filing is true and correct. 

Your response says “ many times”.  That isn’t definitive either. Is there anything more explicit?  My faith in TurboTax is waning.

Many mutual funds have qualifying investments. Your financial institution classified some of the fund income as eligible for QBI not TurboTax. You can accept the QBI without being concerned but if you have qualms ask your financial institution for reassurance.