QBI

[4Lynne]

I have no earned income and do not own a business or rental property.  My 1099-DIV for one mutual fund includes an entry in Box 5 - Section 199A dividends which leads to a QBI deduction of 20% of the entry.

Can this be correct? 

[Bsch4477]

Yes, that is correct. 

[4Lynne]

Thanks.

[decrepit-taxpayer]

Thanks from me too! I am in the same situation as OP. Only, I didn't know the connection between QBI and an entry on Block 5 of Form 1099-DIV. Sure enough, my qbi is 20% of that entry. Wish I'd thought to check here sooner!

[LindaB1993]

This benefit is attributable to the Tax Reform Act.

The Tax Cuts and Jobs Act added Section 199A which affords certain individuals a deduction of 20% of qualified REIT dividends subject to certain holding period requirements. The entire portion of our ordinary dividend distribution is considered a "qualified REIT dividend" for purposes of Section 199A.

[10urban21]

Thank you

[hankandval29]

How would we know if the holding period requirements have been met when the 1099-div (box 5) is from a Mutual fund?

[DianeW777]

The financial organization who completes your form has already identified you may be entitled to the qualified business income deduction (QBID) which is why you have an amount in Box 5. This means you should  check your holding period(s).

• Box 5. Shows the portion of the amount in box 1a that may be eligible for the 20% qualified business income deduction under section 199A. See the instructions for Form 8995 and Form 8995-A
• Holding Period: Sec. 199A(e)(3) states that a qualified REIT dividend is any REIT dividend that is not a capital gain dividend or qualified dividend income (QDI). The qualified REIT dividend is subject to the 45-day holding period rule at the shareholder level under Regs.
  • Tax Cuts and Jobs Act - Section 199A (see Q & A 31)

@hankandval29 

[hankandval29]

Is the 'holding period' for the shares of the mutual fund that I have? I have had this fund since 1991 and have always reinvested all the dividends and have never sold any of my shares in the mutual fund. If the 'holding period' is referring to the shares of the mutual fund that I have had since 1991 then I would think that I have met the 'holding period' requirements?  I apologize for my lack of knowledge on this but would appreciate your opinion.

[AbrahamT]

Qualified REIT dividends from a fund are reported in Box 5, Section 199A dividends, of your Form 1099‑DIV. As long as it is showing up on Box 5 on that dividend form, you can rest assured that it has met the holding period requirements making you subject to the QBI deduction of 20% As @DianneW already mentioned earlier, Qualified REIT Dividends is subject to the 45 day holding period rule at the shareholder level.   

[hankandval29]

Thanks for the clarification.