IRS form 8995 computes the Qualified Business Income Deduction and may reduce your tax burden by reporting a deduction on line 13 of the Federal 1040 tax return.
The REIT / PTP component can be generated from qualified real estate investment trust (REIT) dividends or qualified publicly traded partnership (PTP) income. This component would be reported on 1099-DIV or a K-1.
If you can identify the source of the Qualified Business Income, you can delete the income or re-enter the income to make sure that the correct entry has been made.
See also this IRS Publication.
The Safe Harbor election is an option you can take each year that lets you write off some building improvements as expenses instead of assets. This election will apply to all your businesses, rental properties or farms.
Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.
Here are the requirements for the Safe Harbor election:
- Your gross receipts, including all your other income, are $10,000,000 or less.
- Your eligible building has an unadjusted basis of $1,000,000 or less.
- The cost of all repairs, maintenance and improvements is less than or equal to the smallest of these limits:
- 2% of the unadjusted basis of your building or
- $10,000
Did you qualify for 2021? If you qualified, you do not have to amend last years tax return.
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