Schedule K-1 and QBI

[1891gigi]

I saw this today in the forum, which raised a question: If you have multiple K-1s for different businesses, does the QBI carryover apply only to the same business, or is the QBI shared in total across them all?

How do I report a business loss or carryover from my K-1?

by TurboTax•

608•

Updated 3 months ago

When you prepare your tax return with TurboTax, the software automatically tracks and carries over your QBI business losses to the next year’s tax return.

The QBI deduction is based on net income, so if your business had a net loss, you don't qualify for the QBI deduction for that year. A net loss gets carried over to the next year’s QBI calculation, and is used to offset any future year's QBI income for your K-1 business.

In other words, when the QBI deduction is calculated, your current year’s QBI is reduced by any losses from the previous year. This is called a loss carryover.

If you are preparing your return for the first time in TurboTax, you’ll need to indicate that you have carryovers from the prior year, and manually enter those amounts.

[PatriciaV]

QBI carryovers are specific to the business activity that generated the QBI. In other words, a QBI carryover from last year must be matched to QBI income for this year from the same activity/business.

[1891gigi]

Thanks. Even though net losses and net income from different businesses can all be offset against each other in the same year, it's good to know QBI deductions can be applied only to the same business and carried over if necessary. However, your answer raises another question for me, as someone who has multiple K-1s. If "the software automatically tracks and carries over your QBI business losses to the next year’s tax return," why did it not identify the K-1 business to which two separate entries in this year's Turbotax Form 3800 worksheet  applied? In a flagged error, it left that information in red for me to fill out with only the amounts and "passive" entered. I have no way of knowing which business's names to enter. Isn't Turbotax supposed to carry that information forward, too?

[PatriciaV]

Some users this year experienced missing carryover amounts when transferring their prior year return to the current tax year. We don't expect this to occur again in the future.

@1891gigi 

[1891gigi]

Thanks, but I'm not sure that applies to me. I got the amounts and the note "passive" but not the identifying information, without which the error stopped me from finishing the return. So, I did what the agent suggested and deleted the form, which removed a $257 tax credit I did (according to Turbotax) or did not deserve. Otherwise, I would probably have entered false information, not knowing which business it thinks generated the credit.