form 8995 was generated from w2 box 7 tips

[mikewojo]

Hi, my son used ttax to do his taxes. He has a very simple return with only the w2 from his employment. However, TTAX generated a form 8995 qualified business deduction from the $6 reported on box 7 tips on his w2. Why? He now has a letter from the IRS asking for supporting data for a $1 deduction. I have no idea why this form was generated and all the W2 information was entered correctly. The TTAX program provides no explanation as to why this was done. When the return was mailed it included form 8995 so I am not sure what else to provide. Any suggestions on how to respond to this or why TTAX did this?

Thanks, Mike W

[JotikaT2]

TurboTax will only calculate the forms based upon the answers in the interview portion of the screen.  Form 8995 is for the Qualified Business Income tax deduction and would typically be an option for returns filed with self-employment income or other business activity.  

I recommend reviewing the return as already prepared in TurboTax to ensure the return was prepared correctly.  Please see this link to confirm the W-2 form was entered correctly. For any tips reported on your son's W-2 form, if anything, a Form 4137 would be generated to pay taxes on any unreported tips.

If you notice a difference while reviewing the input, and determine the return was prepared incorrectly, refer to the instructions on the IRS letter.  If you are directed to amend the return, please follow the instructions here.