QBI Deduction on Idaho form43 not working correctly

[stevelindsay541]

I own rental property in Idaho, but I'm a resident of Oregon.  I need to file ID state form 43 for non residents.  When I get to the section that asks about QBI deduction in turbo tax desktop, the application incorrectly shows the federal amount as $0 and doesn't allow me to change this.  I've already filled out the federal return and it appears to correctly generate form 899A (1) which shows a federal QBI of $6082 on line 39.  I don't understand why the ID state version of turbo tax doesn't recognize the federal QBI amount and why it doesn't allow me to edit this field.   I can't edit this field in form mode either.   It insists this "federal amount" (of QBI) is 0, but it is not.  I think this is a bug.  See screenshot below.   For clarity, my only business income is from rental properties. 

[DawnC]

Is the source of the QBI the ID rental property?   Do you have other QBI sourced income on your return?   What is on line 13a on your federal 1040?

[stevelindsay541]

Thank you for responding.  The source of my QBI income is 7 rental properties, six of which are in Idaho (the other in Oregon).   This is the vast bulk of my QBI income.  After looking at form 1995A, it looks like I also have $20 of section 199A REIT dividend income which came from a 1099-DIV that I received.   I have no other sources of QBI income.  Line 13a of my 1040 is $6082.  

[DaveF1006]

Here are some steps to look for to ensure you are receiving the QBI deduction in your Idaho return.

1. The "Rental Election" Check

Idaho follows federal rules for QBI, but the software needs to confirm that your Idaho rentals meet the IRS Safe Harbor requirements (or qualify as a Section 162 trade or business).

1. Go back to the Federal "Wages & Income" section.
2. Review each of your 6 Idaho rental properties.
3. Ensure the box is checked stating that this property is a "Qualified Business Income" entity. If this isn't checked in the Federal section, it won't flow to Idaho.

2. Check the "Business Activity" Links

In the Idaho state interview, there is usually a screen that asks you to "Identify the source of your QBI."

1. If the $6,082 from your Federal Form 8995-A is showing as $0 in Idaho, check if the software has categorized your rental income as "Passive" without a business designation.
2. Idaho Form 43, Line 28 (where QBI usually sits) specifically looks at the Idaho-source portion of that deduction.

3. The "Forms Mode" Workaround (Desktop Version)

Since you are using the Desktop version, 

1. Open Form 8995 or 8995-A in the Federal Forms list. Ensure it is fully populated. 
2. Open the "Idaho Information Worksheet." Look for a section labeled "Qualified Business Income" or "QBI Component."
3. Sometimes, you have to enter the Idaho-source income manually on a supporting worksheet before it will populate the actual Form 43.

If it is still stuck, right-click the $0 field and select "Override" (though use this as a last resort, as it can prevent e-filing in some states).

[stevelindsay541]

1)  Yes, i verified that all 6 Idaho properties have the box checked for "Qualified Business Income" entity.   The federal return shows QBI income from these properties correctly on form 899A, and on the "QBI component (Enterprise #1)" form, and on the "QBI component Ded Summary" form.

2)  How do I check "if the software has categorized my income as passive without a business designation?   Why could this only be happening on the Idaho return and not on the federal return?  The screenshot in my original post shows that the Idaho interview question about the source of my QBI income, and it clearly shows that TurboTax is listing a "federal amount" of 0 for my Qualified business income, and this 0 amount is not something that it will let me edit.  Where exactly is turbo tax getting this number from?

3) Federal Form 8995A (1) is correctly populated and filled out.   Even in forms mode, I can't edit or fix the federal amount of QBI on the Idaho state forms and worksheets without using the "override" function.

I don't want to use the "override" function and then have to paper file forms.  I would like to get to the root cause of this problem, and if it is a bug in the software (Which I think it is), then I would like it to be fixed.  Thank you.

[DaveF1006]

 I would like to see a diagnostic file of your return that will show me only numbers and not any of your personal information. Send this to us immediately so we can resolve this for you.

TurboTax Online

1. Sign in to your TurboTax account and make sure you have your return open.
2. In the left-hand sidebar, click on Tax Tools.
3. In the dropdown that appears, select Tools.
4. In the center pop-up window, click the link that says Share my file with agent.
5. A message will appear explaining that a sanitized copy is being sent. Click OK.
6. Record the Token Number: A 6-digit number will appear. Provide this number to me in this post.

TurboTax Desktop (Windows)

1. Open your tax return in the TurboTax program.
2. Look at the black menu bar at the very top of your computer screen (not the internal program tabs).
3. Click on the Online menu.
4. Select Send Tax File to Agent.
5. Click OK on the confirmation screen.
6. Record the Token Number: Write down the number (including the dash, e.g., 123-456) and send that to me in a reply.

TurboTax Desktop (Mac)

1. Open your tax return in the TurboTax program.
2. Go to the Help menu in the Mac menu bar at the top of your screen.
3. Select Send Tax File to Agent.
4. Click OK to generate the sanitized file.
5. Record the Token Number: Provide the resulting 6-digit number to the agent.
6. Note: These tokens typically expire after a short period (usually 24–48 hours), so make sure to give the number to the agent as soon as you generate it.

[stevelindsay541]

Thank you for your help.  The token number is:

9059978132794091-08798013

[DaveF1006]

Thank you for your token. I do notice that Federal QBI information does not populate into your Idaho return.  As a result, I have spent the past hour trying to reconcile this with no success. The Idaho QBI entry is hard-coded as "0" when you view this in the Idaho return and cannot be changed. 

I have checked all the laws and statues and you should be allowed this deduction as it would make an impact on your Idaho State Return. My suggestion is to override the QBI Smart Worksheet on Form 43 by entering 43,121 in line 1&2 and mail it. I know you would rather efile it, but after looking at your return, there is no way to reconcile it, which includes QBI, other than mailing the return.

[stevelindsay541]

Thank you for investigating this.  It sounds like you agree that this is a bug in TurboTax.  I have already filed an extension, so I have no rush to file my return (I have until Oct 15).  Is there a chance this bug could be fixed within the next 6 months (before Oct 15)?   I hope that this problem can eventually get fixed by the development team, because even if I override the QBI value on my Idaho return and file a paper copy of the return, I'll have the exact same problem next year (and the years after that), unless the root cause of the problem is determined and fixed.

[stevelindsay541]

How do I report this bug that I found to the developers, so that it eventually gets fixed?   

[Vanessa A]

We have a few tax experts still available.  We will work on getting this reported.  

[stevelindsay541]

Thank you!   If there is something I can do to try to help debug this problem, please let me know.  I'm willing to try stuff.  

[Vanessa A]

The development team is working on this.  There is not a specific ETA yet for the fix, but likely a couple of more weeks. 

@stevelindsay541