Qualified Business Income Deduction

[ericinmaryland]

@4showie You dont report W2 in box 17. V=qualified business income (not to be confused with the 199A deduction )

[yongwu]

I finished S corp with K1, box 17, V, STMT. However, in 'Home &Business' , I got '0' for 2019 QBI, while I got real deduction for 2018. Is this still a bug?

[ericinmaryland]

Thats hard to determine without seeing your tax return.

I just want to clarify that you cannot use TurboTax home and business to do an S Corp. tax return. TurboTax home and business is about schedule C, which has nothing to do with an S Corp.

My suggestion is that you look for the QBI worksheets in your Personal tax return to see what might be happening.  Also look at 8995.

As long as you have qualified business income you should see some degree of a deduction unless your income is outside of the range of the 199a deduction. 

[DavidS127]

For returns prepared in TurboTax Home and Business, you should check for updates. TurboTax updates since 3/10/2020 may have resolved your issue.  If you are using TurboTax Download/CD, use the menu at the top (Online>>Check for Updates).  TurboTax Online will be updated each time you sign in.

As Community user ericinmaryland pointed out, for TurboTax Home and Business you can use the Forms mode (icon at top right in blue bar) to find your S Corp K-1 and find out why you are not receiving a QBI deduction. 

Find the S Corp K-1, and scroll a little more than half way down to find Sections D-1 and D-2.  Check to see that your box 17 code V information is entered in Section D-1. If not, refer to the instructions earlier in this thread for entering box 17 code V amounts. 

In section D-2, see if question D 1 about SSTB is checked yes or no.  QBI for an SSTB is limited or completely disallowed if you income exceeds certain levels.

Next, take a look at the QBI Component worksheet for the S Corp.  This worksheet will provide additional information about the QBI calculation.

Finally, take a look at the QBI Ded Summary and the Form 8995 or 8995-A for the "final" details of the QBI deduction calculation in your tax return.

If you are using TurboTax Online, you will need to print or preview a PDF of your tax return with the worksheets to perform this analysis.

@yongwu

@JK86

@4showie

[JK86]

David,

I'm using TT Home&Business, Form 1065-K1 (2 of them) Line 20 - Z codes.  I've re-entered everything from scratch after the update and it's still not picking up QBI.  On QBI Component worksheet, both K-1 are showing 0 on Business Name section and on Line 1.  On QBI Ded Summary, Line 1 shows 0s BUT Line 21 shows 3xx,xxx and Line 22 shows 60,xxx.  Lines 23 & 25 are both 0.  I hope this helps.  

[DavidS127]

For each of your partnership K-1s, in Forms mode scroll down a little more than half way, and compare the Section D-1 information to your box 20, code Z statement from the actual K-1 your received.  If the amounts don't "match", you should be able to enter the correct amounts directly into the form in Forms mode. 

Also, check in that Section D-1 to see if you have more than one type of income reported on a Form K-1 (e.g., business income and rental, or rental income and royalty income).  If so, you will need to enter a separate K-1 for each type of income from the same K-1 business.

Then, work through the next section, Section D-2.  First, check the question A "QBI worksheet to report" to make sure it is linked to the correct QBI Component worksheet.  If these K-1 businesses are being aggregated, they will share the same QBI Component worksheet.  If the K-1 businesses are not aggregated, there should be a separate QBI Component worksheet for each one.

Next, follow through the lines and calculations in Section D-2 to find what "happens" to the amounts from Section D-1 in the QBI calculation.  The QBI amounts reported in Section D-2 go to the QBI Component worksheet to which the K-1 is linked in Section D-2 question A.

If everything on both K-1s looks correct, delete the QBI Component worksheets and the QBI Ded Summary, and then create new QBI Component worksheets (or worksheet if businesses are aggregated) in Section D-1, question A of each K-1.  The QBI Ded Summary will repopulate on its own.

Note also that your total income may exceed the limit for a QBI deduction if your K-1 businesses are considered "SSTBs" (specified services trade or business).

@JK86

[JK86]

David - 

Section D-1 matches up K-1 and created individual QBI Component Worksheet per each.  Only Rental Income.  

Section D-2 - E1 & E3 shows correct amount.  E4 is BLANK.  E6, E8, and H1 are ZEROES compared to correct amounts last year.  H3 is yellow (in case it is relevant).

I tried to delete QBI worksheets and DED Summary but it won't.  It only deleted one, I think.  Also K-1 business is not an SSTB.  As in prior, I've re-entered everything from scratch again.  I hope this helps.  Thanks.

[DavidS127]

The fact that your Section D2 box E4 is blank indicates that TurboTax "thinks" your QBI deduction is limited to zero because of "passive/at-risk limits".  If you "right-click" on that box E4, you will get a pop-up with explanations for the boxes in this section, including this:

"If line E3 is a positive amount, or the ordinary income from Section A line 1a column (a) is a positive amount, then line E3 will transfer to line E4. Otherwise, line E4 will be limited to the smallest loss (as determined using absolute value) between line E3, the ordinary income from Section A line 1a column (a), and the allowed income from Section A line 1a column (c)."

So, now you should check the Section A, line 1a amounts on that same K-1 to find out what is limiting your QBI deduction.  You can "right click" on the amounts there and select "Data Source" to find the source of the numbers.  In particular, you are looking for reasons that passive losses from 2018 are offsetting 2019 passive income, or for amounts treated as "not at-risk" because of answers given to other questions.

[JK86]

Thank you David.  

[ericinmaryland]

@DavidS127 Awesome answer!

@JK86 please let us know what you find. 

[JK86]

"All of my investment in this activity is at risk" on 'Describe the Partnership' screen needed to be checked.  And as David explained in the prior page, on 'We need some information about your 199A income' screen, I checked "(business name) has a rental income (loss)" box and entered the Box 2 amount.  This screen is a new one (I think) compared to last year's.  That did the trick in calculating the QBI for me.

[slickbug]

I entered a 0 in Z code under box 20 and the QBI deduction came alive.  Thanks.

[DavidS127]

Make sure you entered any and all of the information from the code Z statement on the screens that follow you screen where your code Z was entered:

@slickbug

[jmmadland]

Hi - have a K-1 from form 1120-S.  having issues with the box 17 V STMT.  TT give me an error.  when filling out, I did fill in the Statement A section.  still getting the error.  Can't figure out how to solve.

Thanks!

[nravishankar]

After doing all this, it still doesn't calculate the QBI - as on 3/27/2020. I am using TT Home & Business (I didn't need the Business part at all, as I don't have a Schedule C income. Bought it by mistake thinking it will cover my S-Corp filing too).  Had to buy the Business version separately. That itself was misleading branding of the TTax product.

Now, for my personal IT return, it doesn't calculate QBI, after I have entered my Box-17 info from my K-1