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jsherlock
New Member

Why do I have a QBI deduction? I do not own a business. might possibly one of my investments designated something as business? if so, is there a way I should change it?

 
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1 Best answer

Accepted Solutions
DawnC0
Intuit Alumni

Why do I have a QBI deduction? I do not own a business. might possibly one of my investments designated something as business? if so, is there a way I should change it?

Section 199A of the Internal Revenue Code provides many taxpayers a deduction (QBID) for qualified business income from a qualified trade or business operated directly or through a pass-through entity. The deduction has two components.

  1. Eligible taxpayers may be entitled to a deduction of up to 20 percent of qualified business income (QBI) from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust or estate. For taxpayers with taxable income that exceeds $315,000 for a married couple filing a joint return, or $157,500 for all other taxpayers, the deduction is subject to limitations such as the type of trade or business, the taxpayer’s taxable income, the amount of W-2 wages paid by the qualified trade or business and the unadjusted basis immediately after acquisition (UBIA) of qualified property held by the trade or business.
     
  2. Eligible taxpayers may also be entitled to a deduction of up to 20 percent of their combined qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. This component of the section 199A deduction is not limited by W-2 wages or the UBIA of qualified property.

The sum of these two amounts is referred to as the combined qualified business income amount. Generally, this deduction is the lesser of the combined qualified business income amount and an amount equal to 20 percent of the taxable income minus the taxpayer’s net capital gain.  Tax Cuts and Jobs Act, Provision 11011 Section 199A

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3 Replies

Why do I have a QBI deduction? I do not own a business. might possibly one of my investments designated something as business? if so, is there a way I should change it?

If you got a 1099-DIV with REIT earnings that would explain it since they are eligible for QBI.
maglib
Level 11

Why do I have a QBI deduction? I do not own a business. might possibly one of my investments designated something as business? if so, is there a way I should change it?

rental properties can also get you QBI.  It would be something designated as 199A  in a trust or investment.
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DawnC0
Intuit Alumni

Why do I have a QBI deduction? I do not own a business. might possibly one of my investments designated something as business? if so, is there a way I should change it?

Section 199A of the Internal Revenue Code provides many taxpayers a deduction (QBID) for qualified business income from a qualified trade or business operated directly or through a pass-through entity. The deduction has two components.

  1. Eligible taxpayers may be entitled to a deduction of up to 20 percent of qualified business income (QBI) from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust or estate. For taxpayers with taxable income that exceeds $315,000 for a married couple filing a joint return, or $157,500 for all other taxpayers, the deduction is subject to limitations such as the type of trade or business, the taxpayer’s taxable income, the amount of W-2 wages paid by the qualified trade or business and the unadjusted basis immediately after acquisition (UBIA) of qualified property held by the trade or business.
     
  2. Eligible taxpayers may also be entitled to a deduction of up to 20 percent of their combined qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. This component of the section 199A deduction is not limited by W-2 wages or the UBIA of qualified property.

The sum of these two amounts is referred to as the combined qualified business income amount. Generally, this deduction is the lesser of the combined qualified business income amount and an amount equal to 20 percent of the taxable income minus the taxpayer’s net capital gain.  Tax Cuts and Jobs Act, Provision 11011 Section 199A

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