Will I Benefit From Section 199a ?

[ownyourfuture]

While looking over my 2018 tax info @ Fidelity today, I noticed the following under ‘ordinary dividends & distributions’
Section 199A Dividends: $872.17

Since before today, I had never heard of (Section 199A) I researched @ the following 3 sites, & I'm still not sure ?
At times, it sounds like this will only benefit high income single & married filers, but on the other hand, since the $872 figure is showing on my tax summary, I'm thinking I will.

My gross income is around 52k & I own 2 REIT's
National Health Investors, Inc. (NHI) & Realty Income Corporation (O)

https://www.madfientist.com/section-199a/
https://www.forbes.com/sites/jamieh...a-will-be-lost-for-many-in-2018/#53370a944ec3
https://www.forbes.com/sites/peterj...99a-will-fuel-wealth-inequality/#37a36e16248a

 

[RunningBum]

So you would get to deduct 20% of that, or about $165. At the 22% tax rate you'd get about $38 (obviously more for a higher tax rate, less for lower, but probably under $50.

To get this, you'd have to set up an S Corp or LLC or something like that.

Is this really worth it? Am I missing something? I'd think setting up the S Corp would cost you more than that.

 

[USGrant1962]

So you would get to deduct 20% of that, or about $165. At the 22% tax rate you'd get about $38 (obviously more for a higher tax rate, less for lower, but probably under $50.

To get this, you'd have to set up an S Corp or LLC or something like that.

Is this really worth it? Am I missing something? I'd think setting up the S Corp would cost you more than that.

You don't need an S corp or LLC. 199a applies to Sole Proprietors that use Schedule C to report business income. But the application of 199A to REITs is still a little fuzzy to me, and my REIT is in an IRA so N/A to me.

 

[kaneohe]

Check out the wksht on p.37 of the 1040 instructions:
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
The qualified REITs income is added to SE income to get the QBI for one calculation of QBI deduction. There is an alternate calculation in the wksht and the lower of the 2 is picked.

 

[wolf]

Check out the wksht on p.37 of the 1040 instructions:
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
The qualified REITs income is added to SE income to get the QBI for one calculation of QBI deduction. There is an alternate calculation in the wksht and the lower of the 2 is picked.

Thanks Kaneohe. Spent hours trying to find the worksheet/instructions on how to claim the 199A/20% tax savings.

Side note:

2018 everyone said Landlords are eligible. Now, 250 hour controversy,
showed up in 2019. Big gray area now. Not sure if most landlords are aware.

Anyways, I figure I will claim the deduction. Worst case, I'm audited and have to pay the tax + penalty.

IMHO, IRS really messed up. All thru 2018 tax year, We landlords are
eligible. THEN, in 2019, taxpayers are already preparing their returns,
IRS modifies their rules after the fact. Heck, some of us have already submitted their returns.