TurboTax Form 8995

[misshathaway]

Form 8995 is "Qualified Business Income Deduction". Iit is a new fed form for 2019. I discovered that it was included in my fed return as I was checking it right before e-filing. I do not have any business income of any kind. Posting what I have learned, since I think some people here will run in to it.

This form was triggered, in my case, by a box on my 1099-DIV for the mutual fund VTSAX. The box is "Section 199A" dividends. If you have business income you can take a deduction based on this amount. I do not qualify to take the deduction but in order to get rid of the form I would have to not report that Section 199A amount. Otherwise the form will not delete in TurboTax. There is no option in TurboTax to get rid of the form. You can't delete it unless you zero out that box from the 1099-DIV. Here is the most succint explanation I have found of what "The Qualified Business Income Deduction" is and who is eligible to take it.

https://www.policygenius.com/taxes/qbi-deduction/

I am not. There should be an option in TurboTax to not send the form if filing electronically.

 

[audreyh1]

I take the 199A QBI deduction. Even if you are a passive owner of mutual funds, you are qualified to take it as long as you meet the income limit conditions, which TurboTax checks.

I don’t think you have to have business income.

From your article:

In order to qualify for the deduction, a taxpayer must have taxable income from one of the following:

• certain pass-through entities, which pass income tax onto their individual owners instead of paying corporate income tax rates
• qualified REIT dividends, which includes most normal REIT dividends
• qualified PTP income or loss, including only your share of partnership income and loss

Number 2 is what you get from a mutual fund. It’s simply that your total stock market fund owns some REITs, and you received REIT dividends.

According to that article, that qualifies you right there.

I took the QBI deduction in 2018 as well. I own a REIT mutual fund.

 

[misshathaway]

Hmmmm. So I guess the pass-through business entity in this case is the mutual fund itself.

If I can take it, it would mean that I could e-file as is, which would be great.

 

[audreyh1]

I think TurboTax is doing it right.

That link you provided clearly states that most REIT dividend income qualifies for the QBI deduction treatment.

It has nothing to do with the mutual fund being a business entity - it’s a mutual fund.

It’s because you own shares in one or more REITs though the mutual fund. Those are pass-through entities.

A company must distribute at least 90 percent of its taxable income to its shareholders each year to qualify as a REIT. Most REITs pay out 100 percent of their taxable income. In order to maintain its status as a pass-through entity, a REIT deducts these dividends from its corporate taxable income.

 

[misshathaway]

You just saved me, and probably others, a bunch of tax jargon homework. Thanks.

Now I have to eat crow and exonerate TurboTax in another thread.

 

[misshathaway]

Adding another link for future readers

https://www.thetaxadviser.com/issues/2019/aug/sec-199a-dividends-ric-interest-reits-ptps.html

 

[Bir48die]

Second string on this. The 199A box triggers this. Understand confusion about this. It is what it is.

 

[freedomatlast]

I also have a box showing Section 199A dividends on my 1099-DIV for VTSAX. I'm filing the old fashioned way using pen and paper forms. I was just going to ignore this as I didn't think I qualified for the deduction, that is, until reading this thread.

Would you mind sharing what lines TuboTax filled in on form 8995 and what information was provided on the lines that were filled out? I read the instructions and am still unsure how to fill out that form correctly in order to take the deduction.

Thanks.

 

[kaneohe]

I also have a box showing Section 199A dividends on my 1099-DIV for VTSAX. I'm filing the old fashioned way using pen and paper forms. I was just going to ignore this as I didn't think I qualified for the deduction, that is, until reading this thread.

Would you mind sharing what lines TuboTax filled in on form 8995 and what information was provided on the lines that were filled out? I read the instructions and am still unsure how to fill out that form correctly in order to take the deduction.

Thanks.

not TT but another tax software program.
Lines 6,8,9,10,11,12,13,14, 15 a far number of lines but many numbers appear repeatedly so there are only a few independent numbers. Basically the sec 199A dividends appear on line 6 &8. 20% of that is line 9,10.
Taxable income is line 11, CG line 12, difference is line 13, 20% of line 13 is line 14. Line 15 is min of line 10/line 14= line 10 in typical case.

 

[freedomatlast]

Thanks, kaneohe!

 

[misshathaway]

Yup. Those are the sources in the lines that TurboTax has on mine - not that it should be any different.

 

[socca]

Form 8995 is "Qualified Business Income Deduction". It is a new fed form for 2019.

FWIW, for the 2018 tax year Form 8995 was a worksheet in the IRS 1040 instruction booklet. Form 8995-A (for folks who have income from ag coops) was a worksheet in Publication 535. The friendly IRS folks who answered the phone weren't familiar with either of these worksheets when I tried to have an error corrected in my 2018 tax return. After arguing with the reps for awhile I gave up and donated the amount in question to paying down the National Debt. The last time I looked, the ND is still there, so I didn't donate enough.

I haven't looked at what the 2019 IRS instructions and publications have to say about the QBI deduction. From what I've seen so far, TurboTax handles the 2019 QBI deduction correctly. However, most of my tax prep work remains to be done, so this is just a preliminary opinion - YMMV.

 

[Midpack]

First year I’ve had a form 8955 spit out on TT too IIRC. Just reviewed it this afternoon, looks correct.

 

[freedomatlast]

Thanks again misshathaway and kaneohe. I finally had time to look at this again and filling out the form was easy with your input.

One last quick question....Just want to make sure that there is no indication necessary anywhere on form 8995, that the Qualified REIT dividends are from Vanguard, correct?

 

[pb4uski]

Yes, I ran into that last week and posted it here.

https://www.early-retirement.org/forums/f28/determining-qualified-dividends-101391.html#post2360638

My foreign taxes paid/foreign tax credit ended a little less than what I estimated, however, I did have one interesting surprise in my 1099-DIV.... Vanguard Total Stock included Section 199A dividends that I had never seen before and I got a QBI deduction for 20% of the Section 199A dividends... a pleasant surprise. ....

 

[kaneohe]

Thanks again misshathaway and kaneohe. I finally had time to look at this again and filling out the form was easy with your input.

One last quick question....Just want to make sure that there is no indication necessary anywhere on form 8995, that the Qualified REIT dividends are from Vanguard, correct?

didn't see anyplace ..........anyways IRS has the 1099DIV and can check the
Box 5 to confirm.

 

[pb4uski]

..... One last quick question....Just want to make sure that there is no indication necessary anywhere on form 8995, that the Qualified REIT dividends are from Vanguard, correct?

Correct, my Form 8995, line 6, Qualified REIT dividends... has the same amount as shown on my Vauguard 1099-DIV, box 5.

 

[fosterscik]

Anyone else using H&R Block and having trouble?
My form 8995 shows $260 on lines 6 &8, $52 on lines 9, 10.
My line 14 is MUCH larger than $52

But the HRBlock program generates 0 for line 15 (supposed to be the the smaller of line 10 and line 14)

For $52 it may be worth filing taxes by mail (especially since I owe the IRS money)!

 

[lem1955]

All of my VTSAX is in tax deferred accounts so TT didn't create a FORM 8995 for my 2018 taxes. But I did have QBI from self-employment and from passive income reported on K-1s. In that case, TT uses a worksheet to compute the QBI deduction. Today, for the first time I went looking for the worksheet and saw TT took the QBI on my K-1 income. Thank goodness and the programmers at Intuit-TT!


Now I see that form 8995 is new for 2019 and worksheet is how it was done in 2018 for everybody. Will the form 8995 preclude e-filing in 2019 too? I couldn't figure out last year why I couldn't e-file!!

 

[audreyh1]

Huh? I took the QBI last year and eFiled successfully.

I suspect your problem had to do with the unusual penalty waiver which messed up a lot of people’s returns and prevented efiling.

For 2018 TurboTax filled out a worksheet that looked similar to form 8995.

 

[socca]

Now I see that form 8995 is new for 2019 and worksheet is how it was done in 2018 for everybody. Will the form 8995 preclude e-filing in 2019 too? I couldn't figure out last year why I couldn't e-file!!

Intuit probably doesn't have a legal obligation to support e-filing for folks who file Form 8995 or 8995-A, but with many taxpayers taking a 2019 QBI deduction I'm reasonably confident that Intuit will support it. I'll definitely complain to Intuit in the unlikely event that they don't. (I use the download version of TurboTax; I have no experience with the online version).

 

[misshathaway]

Intuit probably doesn't have a legal obligation to support e-filing for folks who file Form 8995 or 8995-A, but with many taxpayers taking a 2019 QBI deduction I'm reasonably confident that Intuit will support it. I'll definitely complain to Intuit in the unlikely event that they don't. (I use the download version of TurboTax; I have no experience with the online version).

I just e-filed yesterday with Form 8995 from the online version of TurboTax.

 

[ownyourfuture]

Very glad to find this thread, because I’m also running into a ‘problem’ with QBI using turboTax deluxe.

In the deductions & credits summary, it's showing a QB I deduction of $469.00
After reading the thread, I'm assuming this is because I own 2 REIT’S in a taxable account. Realty Income (O) & National Health Investors (NHI) ?

My only concern, is that I don't recall getting this deduction in 2018 ?
I'm going to continue doing the return, & also keep an eye on this thread.

Thanks to all of those who offered answers

 

[audreyh1]

You may have missed the opportunity in 2018 assuming you owned those REITs then too.

I got the deduction both years. 199A dividends were reported on my 1099-DIV both years. TurboTax used a worksheet to calculate for 2018 so the form, seems to be new.

 

[scrabbler1]

not TT but another tax software program.
Lines 6,8,9,10,11,12,13,14, 15 a far number of lines but many numbers appear repeatedly so there are only a few independent numbers. Basically the sec 199A dividends appear on line 6 &8. 20% of that is line 9,10.
Taxable income is line 11, CG line 12, difference is line 13, 20% of line 13 is line 14. Line 15 is min of line 10/line 14= line 10 in typical case.

I wish I had looked for this thread before I went to the trouble of figuring this out for myself a few days ago after my (snake-bit) friend's 1099 came out and I had to integrate this new amount into his return I am working on. Your description is perfect for someone who only has some income shown on 1099-DIV.

The only thing I would add is that the amount on Line 15 gets copied to Form 1040, Line 10. That gets added to your standard/itemized deduction whose sum on Line 11a gets subtracted from your AGI to get your taxable income.