Why was a 8995 generated when I am not claiming QBI?

[charjean47]

I filed Safe Harbor QBI in 2020 & 2021 and created a group as an Enterprise for our 6 rental properties.  I am not able to claim Safe Harbor QBI this year and chose that I am not able to this year in the program.  This year for 2022, the program stated:  Check This Entry.  Schedule E Worksheet for this property; Sec 179 Carryforward-Reg should not be entered, because this rental property is not a commercial property.  So, I changed the amount from $414 to zero.  Now, I have an amount on my 1040-SR, line 13; OBI deduction from Form 8995 (QBI Deduction Simplified Computation).  Also, a QBI Deduction Summary, Depreciation and Amortization Report, and Alternative Minimum Tax Depreciation Report for my records was created.  What do I do now??  Can I manually delete the amount on 1040-SR, line 13???  Thanks

[AmyC]

No, line 13 comes from the 8995. Please look at your 8995 and see which lines have numbers. I think you have things muddled. Please review the following in regards to last year and this year.

• As for the sec 179 carryforward, it was disallowed before due to limited income. See here for more as sec 179 can be related to rentals. Sec 179 can NOT be used for the rental building. If you managed that in the past, you would want to amend your return. If it was simply an allowed carryover, you should use it.
• The Safe Harbor Election, allows you to expense improvements under $10,000 in certain circumstances. After you chose this election, enter the cost of the improvement as a Rental Expense (repairs, for instance) and not as a rental asset.

[charjean47]

You are right.  I was confused and still am.  I see where the mix up is between Safe Harbor and QBI.  Thank you for that.  I still don't know why the 8995 was created when it involves QBI and I chose not to claim QBI this year.  I did compare the figures.  The 8995 has a figure on line 6 for REIT dividends.  I checked all of the dividends and can not find that amount.  I don't know where the program got that amount. Line 12 has a capital gain.  Line 15 has $29 as the amount which is on line 13 on 1040-SR.  Why is there a QBI document at all when I am not claiming QBI?  

As far as Safe Harbor, why did the program allow me to take it last year?  The amount is for a refrigerator that we purchased for one of the rentals 11/27/21 for $414.  So, was it wrong in 2021 to use Safe Harbor for this purchase?  So, I guess as you say, I will have to amend 2021.  I know I don't have a good understanding.  Thanks

[JamesG1]

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.

@charjean47