Can REIT dividends under sec 199A be reduced by a 20% deduction?

[DawnC]

Yes.  REIT dividends qualify for the qualified business income (QBI) deduction.  However, the form needed to report the deduction (8995-A) is not ready yet.  It is currently scheduled to be ready on 02/20.    

Form 8995-A is next to the last form on the list on this listing of federal forms availability.  

[marvin5679]

My question is this,  Linking the QBI deduction and the REIT and PTP dividends as pass through entities implied in the draft instructions that only those in a ":trade or business" would be eligible for the 20% deduction,

So the question is" Can ANY taxpayer claim the REIT and PTP dividend  deduction under sec 199A!

In addition, the draft instructions as I read them noted that only REIT dividends paid out of earnings qualified under 199A.  The community reply to my earlier posting was that REIT dividends as reported under 199A are assumed to be paid out of earnings,  In addition, to meet 199A inclusion, the payee has to be "qualified"

Which REIT and PTP entities are qualified?

      Finally, will TurboTax update its program to include form 8995

[JohnB5677]

You wanted to know if ANY taxpayer can claim the REIT and PTP dividend  deduction under sec 199A!

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. Income earned through a C corporation or by providing services as an employee is not eligible for the deduction.  https://www.irs.gov/newsroom/qualified-business-income-deduction

Also,a rental real estate enterprise will be treated as a trade or business for purposes of the QBI deduction if certain criteria are met. For more information, on the safe harbor see News Release IR-2019-158

Are all 199-A Qualified?  

Yes provided they are received through a passthrough entity.

"Section 1.199A-6 requires passthrough entities to report section 199A information to their owners or beneficiaries. Taxpayers need to report the information to the IRS by attaching the applicable statement to Form 1040 or to the Schedules K-1 for the Form 1041, Form 1065, or Form 1120S, as appropriate, to ensure the correct amount of deduction is reported under section 199A."

https://www.irs.gov/pub/irs-drop/td-reg-107892-18.pdf

Yes. TurboTax will update the 8995.  I do hesitate to give a date because it has been delayed several times.

[J_J_B]

Where does the Form 8995(a) pick-up REIT Dividends?  I didn't enter any, but  they "show up" on Line 28 - this is then generating a QBI deduction which I don't think is correct.  Any ideas?

Thanks.

[Anonymous_ · Accepted solution]

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@J_J_B wrote:

Where does the Form 8995(a) pick-up REIT Dividends?  I didn't enter any, but  they "show up" on Line 28 - this is then generating a QBI deduction which I don't think is correct.  Any ideas?

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See https://www.irs.gov/newsroom/tax-cuts-and-jobs-act-provision-11011-section-199a-qualified-business-i...

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.

[Anonymous]

certain REIT dividends qualify for the 20% QBI/199A deduction.  However, line 28 of 8995-A also includes QBI from Publically Traded Partnerships (PTP).

REIT dividends would come from 1099-Div  (line 5) or even K-1's from partnerships (whether they are Publically Traded or not) PTP income comes from the QBI section of the K-1's. 199A dividends/QBI Income can also come from k-1 info for S-Corps. and estates/trusts.