Tax Year Prior to 2020: Unable to efile due to QBI Deduction Worksheet Schedule B

[DavidS127]

You would have the same issue (can't e-file the required safe harbor election) even if your rental properties were not aggregated.  It is the safe harbor election that necessitates a statement, regardless of whether the rentals are aggregated.

And yes, one you aggregate, you must continue to aggregate.

The IRS didn't issue the QBI safe harbor rules until late 2019, so most 2018 tax returns were filed before this was required.  In other words, requiring the signed and dated safe harbor election for QBI is essentially "new for 2019".

[sbjoshi03]

It is not allowing me to efile. When i delete QBi my taxes went up so i do need to keep that selections. Any other ideas

[DavidS127]

If your tax return includes a Rental Activity Safe Harbor Statement, that statement has to be signed and dated and included with a "printed and mailed" tax return.  TurboTax cannot attach a PDF for the Rental Activity Safe Harbor Statement to an e-filed 2019 tax return.

Note that for rental activities not conducted by a real estate professional or not rented to a a related party, a rental activity can fall into three categories for qualified business income deduction QBID:

1. A rental activity not eligible for the QBID because it does not meet the safe harbor criteria and is otherwise not considered a trade or business;
2. A rental activity eligible for the QBID because it does meet the safe harbor criteria (Safe Harbor statement required); and,
3. A rental activity eligible for the QBID because it is considered a trade or business by the owner (Safe Harbor statement not required).

Some users have reported a rental safe harbor election statement in their tax file even after they do not elect the QBI rental activity safe harbor choice.  If you have a rental safe harbor election statement you are sure it does not belong in your tax return you can delete it using the Delete a Form option in TurboTax Online, or in Forms mode of TurboTax Download/CD.

[kthanney]

This answer solved my issue with eFiling my Federal Return through TT Online.  Saved me a lot of heartache.

[DM26]

Hello David,

We seem to have come across this same issue faced last year.  Will TurboTax be updated again for tax year 2020 to allow efiling with the “QBI Deduction Worksheet Schedule B – Aggregation of Business Operations” and, if so, WHEN?

[DougM]

Seriously???!!!  Multiple rental properties is exactly the kind of reason that I buy the business version of TT. I'll be really disappointed if this doesn't get fixed soon.

[JWEI_95661]

I find the same in 2020 turbo tax filing. I understand IRS did not finalize 199A at the time of the tax due last year. Now 199A is finalized. How come I am still not able to e-file if I choose QBI safe habor? Any news?

[Prethen]

I forgot, what's the workaround for this? I think we just need to delete a particular form that was auto-created and then you can e-file.

[RUJOE9]

What has changed since 2019.  I E filed last year no problem?  I cannot E file because of the QBI rental real estate  safe harbor statement?  Must I really print and sign?  I've tried to delete the form, but it just pops back in.  

Here is what I found on another thread,  I am # 3 A rental activity eligible for the QBID because it is considered a trade or business by the owner (Safe Harbor statement not required).

Why can I not delete the statement?

 DavidS127

Expert Alumni

‎July 14, 2020 12:44 PM

 

If your tax return includes a Rental Activity Safe Harbor Statement, that statement has to be signed and dated and included with a "printed and mailed" tax return.  TurboTax cannot attach a PDF for the Rental Activity Safe Harbor Statement to an e-filed 2019 tax return.

Note that for rental activities not conducted by a real estate professional or not rented to a a related party, a rental activity can fall into three categories for qualified business income deduction QBID:

1. A rental activity not eligible for the QBID because it does not meet the safe harbor criteria and is otherwise not considered a trade or business;
2. A rental activity eligible for the QBID because it does meet the safe harbor criteria (Safe Harbor statement required); and,
3. A rental activity eligible for the QBID because it is considered a trade or business by the owner (Safe Harbor statement not required).

[RUJOE9]

If your tax return includes a Rental Activity Safe Harbor Statement, that statement has to be signed and dated and included with a "printed and mailed" tax return.  TurboTax cannot attach a PDF for the Rental Activity Safe Harbor Statement to an e-filed 2019 tax return.

Note that for rental activities not conducted by a real estate professional or not rented to a a related party, a rental activity can fall into three categories for qualified business income deduction QBID:

1. A rental activity not eligible for the QBID because it does not meet the safe harbor criteria and is otherwise not considered a trade or business;
2. A rental activity eligible for the QBID because it does meet the safe harbor criteria (Safe Harbor statement required); and,
3. A rental activity eligible for the QBID because it is considered a trade or business by the owner (Safe Harbor statement not required).

[Irene2805]

If you want to remove the Safe Harbor statement, please follow the steps outlined below.  If you are unable to remove the form, you will have to go through the interview and remove the "trigger" for the form:

1. Go in to the business portion of your return (Business Income, Rental Properties).
2. On the Summary Screen for your business/rental. Click the Edit box next to Assets.
3. In the Assets section, click on the Add expense or asset box.
4. If you’ve already entered some assets, you will see the screen, Do you want to go directly to your asset summary?  Mark the No box and click Continue.
5. When you come to the screen, Did you buy any items that each cost $2,500 or less in 2020? mark the Yes button and click Continue.
6. On the screen Let's see if you qualify to deduct these items as expenses, mark the No and click Continue.

That should remove the Safe Harbor election trigger.  You can then check the list of forms to make sure the election has been removed.  To do this please follow these steps:

TurboTax Online

1. While in your return, click on Tax Tools > Tools (in the black bar at the side of your screen).  
2. In the Tools Center, under Other helpful links click on Delete a form.
3. Click Delete next to the form you want to delete and follow the onscreen instructions. 
4. Once you have finished deleting the desired form(s) click the Continue with My Return box (in the lower right of your screen).

TurboTax CD/Download

1. Go into Forms Mode by clicking on the Forms icon in the top right of the blue bar. 
2. In the Forms in My Return list on the left, click on the form you wish to open and delete.
3. Click on the Delete Form box at the bottom of the screen.
4. To return to the interview, click on the Step-By-Step icon in the top right of the blue bar.  

@RUJOE9

[sailworkless0]

So this topic is making me a bit nuts.

I own 6 rental houses. I know I meet safe harbor requirements for QBID.  In TY2019, I got the deductions via 8995 forms, did not do anything regarding safe harbor. E Filed with no problems. Is there any reason I have to declare the safe harbor? Why not just claim the QBI deduction without the safe harbor statement, and efile as usual? Am I missing something that will bite me later?

If I wanted to print and mail in my taxes, I wouldn't have bought TT.

[ReneeM7122]

The reason for the safe harbor is to allow certain interests in rental real estate, including interests in mixed-use property, to be treated as a trade or business for purposes of the qualified business income deduction under section 199A of the Internal Revenue Code (section 199A deduction).  Some users have reported a rental safe harbor election statement in their tax file even after they do not elect the QBI rental activity safe harbor choice.  If you don't think you need it, then you can remove the safe harbor election statement and proceed to e-file your return (since you are correct, TurboTax can't e-file your return with the safe harbor election).

Here is a link to the IRS regarding safe harbor and the QBI deduction.

Here is how to delete a form:

How do I view and delete forms in TurboTax Online?

• Open or continue your return in TurboTax.
• In the left menu, select Tax Tools and then Tools.
• In the pop-up window Tool Center, choose Delete a form.
• Select Delete next to the form/schedule/worksheet in the list and follow the instructions.

@sailworkless0

[DougM]

Ok, but will TT fix this so that we *can* efile with the safe harbor statement?  If so, when?

Rental property must be a common reason for people to buy the business edition of TT. It seems that it should be fixed. Can you please find out and let us know?

Thx,

Doug

[tol]

Stronly agree.  TT has had 2 years to deal with this bug.  Please get it fixed.

[DM26]

It does not make sense that we should have to disaggregate in order to efile.  By disaggregating our business operations will require the taxpayer to spend 250 hours or more of rental services for EACH property and possibly have the QBI deduction reversed if audited.  Why would we have to do this just because TurboTax won’t update their software?  I purchased the Premier software since I own a lot of rental properties.  I do not want to paper file.  Also, filing on paper will cause delays in processing as well as could trigger an audit with some data being omitted or incorrect when the data is entered manually. 

Last year this same issue was present but later WAS RESOLVED allowing us to efile if we aggregated on Form 8995-A Schedule B. I understand the delay last year since this was still a relatively new issue.  This should NOT be the case with 2020 tax returns. 

Last year, on March 27, 2020 11:12 AM, DavidS127, Expert Alumni, posted the following:

Form 8995-A Schedule B e-file will be enabled in the update scheduled on or about 4/1/2020.

Why is TurboTax not responding to this?  The “EXPERT” Employee Tax Experts seem to be conveniently ignoring this issue.  Please comment!!