K-1 box 20 z

[DavidS127]

If there are entities reporting QBI on your tax return, it will not be prepared correctly unless you report the Section 199A information for each entity separately.  That will require a separate K-1 for each passthrough entity.

The same is true if your K-1 reports income or loss in more than one of the "box 1, box 2, or box 3" lines on your K-1.  That requires a separate K-1 for each of those "boxes" that report income.

[Dosperros25]

do i have to upgrade to something else to in order to see box 20Z and fill in the info for qbi

[TaxJesus]

It may be the case that having multiple entities reporting QBI, or having multiple of boxes 1/2/3 filled in, are NOT THE ONLY WAYS to generate the error that is the subject of this thread. In my case, there was only one entity, and only box 1 was filled in. I had 2 items in box 20 labeled with "Z", but I ended up putting both of those on different but corresponding lines in the Section D1 table I described in my previous post.

I think there is a bug in TurboTax, where it failed to propagate the information previously entered into boxes 1, 2, 3 etc. into the Section D1 table in the full schedule K-1 form. Once I added some info there, and then went back through the interview, a new screen entitled "We need some information about your 199A income" popped up showing that table and allowing me to enter values there. That had not popped up previously. The values I entered on two lines on that screen were the two values marked as "Z" in box 20. Seems like this table should pop up whenever anyone has an entry marked Z in box 20. For now, as I suggested, you can just open the K-1 in Forms and edit section D1 directly.

[DavidS127]

This is the correct procedure for a partnership K-1 with box 20 code Z:

Enter your code Z on the "box 20 screen".  You don't need to enter an amount on that box 20 screen, but you do need to click Continue after you have entered the code Z.   It doesn't "hurt" anything if you have an amount on the box 20 screen for code Z, but the amount you enter there doesn't get used for anything.

The next screen is "Describe the Partnership" and the next screen is "We see you have Section 199A income" and then you should get "We need some information about your 199A income", followed by "Let's check for some uncommon adjustments".  When you get to those last two screens, when you check the box on a line, other boxes will "open up" to enter the amounts from your Section 199A Statement/STMT.

Note that Unadjusted Basis of Assets amount goes on the "....has UBIA of qualified property" line.

To get back to the K-1 summary screen and find the Schedule K-1 to edit, click the "magnifying glass Search" icon on the top row, enter "k-1" in the search window and press return or enter, and then click on the "Jump to k-1" link to find the K-1 you need to edit.

Here are screenshots of the "We need some information about your 199A income or loss" and "Let's check for some uncommon adjustments" screens where you enter the information from your K-1 Section 199A Statement/STMT:

@Dosperros25

[IHAVEAQUESTION4U]

My "master" K-1 has multiple entities listed on the Section 199A Box 20 Code Z schedule.  Do I have to create a separate K-1 w Section 199A schedule for each entity listed?  Thanks! 

[joy3000]

Even after reading all of these answers I have  basic questions since this is my first time having K-1 forms. I have Turbo Tax Premier.  1. When the boxes pop up that you posted, Need more info on your 199a income: am I entering the same numbers I already entered from the K-1 Part III? Are they just asking you to input the same numbers? Because I still don't have/quite understand this Statement A thing. There is no "Statement A" to receive and I called the K-1 info numbers from my investments and they say I have everything, just read the IRS K-1 Instruction booklet. I have my K-1 forms with sections 1, 2, 3, and a Supplemental Information page with extra entries for box 20 and sometimes another box that I have to put in, along with some statements about other sections. Is Box 20Z just a description of Box 1?

2. I also thought I read that I will still need to go into FORMS and input extra info into some forms.

3. So I have to do worksheets with every K-1 form  for Adjusting the Basis of a Partner's Interest in the Partnership? And I have to fill out FORM 8995 with all of the info from my 3 K-1 forms put together on the list at the top?

[joy3000]

I did not get a 199A Statement...so I just left all those blank and put none of the above apply...Correct?

You stated earlier not to put in the info from the previous boxes, so I didn't, but I don't have any Statement that pertains to the 199A income/loss....

Ugh, I really don't get this. I understand the investment itself but not all this reporting stuff!!!

[cookers33]

Thank you DavidS127 for the detailed explanation.  I use Premiere edition with PC download (not online). So I receive three K-1s from non PTPs that report in box 1 and 2.  That’s fine and I have been filing it properly using separate K-1s (for a total of 6) for each activity.  But here’s where it gets exciting: there are between 4 and 6 passthrough entities for each of those partnerships that report Box 20 Code Z (Section 199A) amounts.  These numbers have been provided in a separate statement attached to Form 1065 with independent EINs regarding that code Z.  Each of the 4 to 6 passthrough entities reports Ordinary Income, Rental Income, W-2 Wages, Self Employment Earnings and UBIA. 
 
So here are my questions:

1) Exactly how many K-1s do I need to file?  My guess is around 60 if I read your aforementioned statement correctly...!

2) To verify, I need to adjust the primary Partnership (the one that sends me the K-1) Box 1 and Box 2 amounts by adding or subtracting the passthrough entity amounts found in the statement addendum?  Or is that adjustment just for Box 20?

3) Which of the “first three boxes” of the K-1s do I attach W-2 Wages, Self Employment earnings and UBIA to?  My guess is Box 2 (rental real estate income) for UBIA but not sure about the W-2 or Self Employment.

4) Is there different software that can file Box 20 Code Z more expediently?  We’re talking hours upon hours of data entry (with wrong inputs likely) for a whopping total QBI deduction of around $65.  Is the IRS looking at a way to streamline this QBI Section 199, or just using it as a trap to force an audit?  

5) When the partnership ends, I am finally distributed my capital amount, and I receive the Final K-1, how much work am I looking at to reconcile all of these Box 20 Code Z amounts from numerous passthrough entities over the years?

[gloriah5200]

If there was no information provided to you regarding the QBI Deduction for your K-1, then there would not be one on the return,

You might contact them to verify that there should not have been one on the k-1.

[Molly708276]

I entered the K-1 for a partnership with two activities.  I received one K-1 with the same tax id number.  Box 20 has a statement  showing Ordinary Loss      -329

                                        Rental Income            13,488

                                         Unadjusted Basis      254,569

 Box 20 also shows  A-  $122  (interest income

The program is recording the net income twice on 8995.

[cookers33]

My take on the code Z amounts is that the Ordinary Loss pertains to Box 1; the Rental Income and the Unadjusted Basis pertain to Box 2.  Amounts in boxes 1 through 3 need to be divided into 3 separate K-1s with their accompanying amounts (as referenced above) separated per K-1.  Perhaps if you segregate everything as discussed in this paragraph, the net income will only record once?

The Box 20 A will be reflected in Box 5.  Sometimes it is more than Box 5 if there is non-interest investment income.  If there was only interest income, Box 5 and Box 20A should be equal. Here again you would need to determine which of Box 1 through 3 that Box 20A pertains to and ONLY report it on that specific K-1 (Ordinary Business [Box 1], Net Rental Real Estate [Box 2], or Other Net Rental [Box 3]).

I would prefer if the tax pros would get back to you for their take on this topic, as well as my aforementioned question.  But until that time, this (above) is what I do.

[JamesG1]

@Molly708276

Partnership K-1 has entries in both box 1 and box 2?  Was the K-1 entered as two entries, one for box 1, one for box 2?

At the screen Choose type of activity, click This K-1 reports amounts in more than one of boxes 1, 2 and 3.

The screen displays:

Since your K-1 reports amounts in more than one of boxes 1, 2, or 3, the partnership/LLC is involved in more than one type of activity. You should treat each activity separately in TurboTax.

Enter the business activity amount, box 1, on one K-1
Enter real estate rental activity amount, box 2, on another K-1
Enter other rental activity amount, box 3, on a third K-1.

This will allow TurboTax to properly track your loss carryovers. This is especially important if you ever sell your interest. For all amounts reported following Box 3, look for a statement attached to your K-1 to help you allocate these amounts to the proper activity.

[renee9398]

2 LLC owners 50/50.  K-1 box 20 Z *stmt.  When I do our home taxes I get an error because of the Z *stmt.

Where or what did I miss while entering my Business tax info?  or is it ok to proceed with that error?

[ThomasM125]

The letter "Z" in box 20 denotes a qualified small business income (QBI) deduction. Often you enter the same amount as listed for your income on line 1 to 3 of your K-1 schedule. You need to make sure you enter the sign properly, if you have a loss in line 1, then you need to enter the QBI deduction as a negative number. 

You will not be able to e-file your tax return if there is an error in it, and the QBI deduction may lower your tax, so you should correct the error before you file your tax return.

[tke630]

@DavidS127 I am dealing with a K-1 from a partnership that I work for for the first time in 2020 so your response above was helpful. The Statement A has three entities listed (one of which is the partnership that provided the K-1 and two are entities are businesses owned by the partnership). I understand that I need to split the K-1s in TT to account for this but I am not sure which values to put in for the other K-1s (that don't really exist). All of the values on the actual K-1 appear to the aggregate from all these entities so am I supposed to split them out somehow or if not it seems like they would be double counted. Maybe I'm missing something or making this more complicated but any guidance is appreciated.