Business Deductions and Form 8995

[A-H]

Looking back at my 2020 tax return which was completed by a CPA, my 8895 form states that I have a carryover of a loss on line 16, but on line 17 there's a zero. Is this a deduction I can use this year, and if so, can I use it toward regular income, since I don't have any business income, due to the pandemic? I would like to use Turbo Tax this year, but need to understand what is going on with this first.

[JohnW152 · Accepted solution]

The amount on Line 16 – which should be a negative amount – is, indeed, a loss that you can carry over to future years, beginning this year.  

You can’t use it against regular income, though – it can only be used to offset QBI.

According to Line 16 in the 2020 Instructions for Form 8995:

This is the amount to be carried forward to the next year. This amount will offset QBI in later tax years regardless of whether the trade(s) or business(es) that generated the loss is still in existence. This carryforward doesn’t affect the deductibility of any loss for purposes of any other provisions of the Code.

[A-H]

Thank you for your answer! If I don't file any SE forms for 2021, and haven't filed using Turbo Tax before, how will TT or the govt. know I have a carry over, if I start my business back up in a year or so (especially if I don't use Sched. C and Form 8995 this year)? How many years does the carryover work for upcoming years? Thanks!

[JamesG1]

QBI carryforward losses carry over indefinitely until completely offset by positive QBI.

Your tax return and the IRS record of your taxes provide justification for the carryforward if you do not use the carryforward immediately.

[rsingler]

I don't see any entry on my 1099-DIV forms for 2021 that suggest such an entry.  Where do I look on my 1099-DIV forms for such an entry that would carry over to Form 8995

[JamesG1]

Section 199A dividends are reported on an IRS Form 1099-DIV box 5.

The Qualified Business Income Deduction can be generated from one of two components.

The QBI component can result from a sole proprietorship, partnership, S corporation, trust or estate.

The first component would likely be reported on Schedule C, Schedule E, Schedule F or a K-1.

The REIT / PTP component can be generated from qualified real estate investment trust (REIT) dividends or qualified publicly traded partnership (PTP) income.

The second component could be reported on 1099-DIV or a K-1.