Qualified Business Income Deduction - Pass-Through Partnership Income

Per the Instructions for Schedule K-1 (1065), page 17:

Codes Z through AD. Qualified business income deduction. Generally, you are allowed a deduction up to 20% of your net qualified business income plus 20% of qualified REIT dividends and qualified PTP income from your partnership. The partnership will provide the information needed to figure your deduction. Once you have this information, you will use one of two worksheets to help you figure your deduction for qualified business income.

Use Qualified Business Income Deduction - Simplified Worksheet, included in the Instructions for Form 1040, if:

  • You have qualified business income, (defined below),
  • Your 2018 taxable income does not exceed $157,500 ($315,000 if married filing jointly), and
  • You are not a patron in a specified agricultural or horticultural cooperative. Use the worksheet and the instructions in Pub. 535 if you do not meet all three of these requirements.

Code Z. Section 199A qualified business income. Use the appropriate worksheet to report your portion of qualified business income.

  • Qualified Business Income Deduction - Simplified Worksheet, line 1. See the Instructions for Form 1040.
  • Pub. 535 Worksheet. If a specified service trade or business, see Schedule A; if you are electing to aggregate this trade or business with another, see Schedule B; if any of your qualified trades or businesses generated a net loss, see Schedule C; otherwise enter information on lines 1 and 2.

To enter the Qualified business income (QBI) information from Schedule K-1 in TaxAct:

  1. From within your TaxAct return (Online or Desktop) click Federal. On smaller devices, click in the upper left-hand corner, then Federal
  2. Click Business Income under Federal Quick Q&A Topics to expand that category, then click Partnership income (Form 1065 Schedule K-1)
  3. Click Add to create a new copy of Schedule K-1 or Review to modify an existing form
  4. Continue through the interview questions until you reach the screen titled Partnership - Schedule K-1 Information, then check the box in front of Box 20 - Other Information, and then click Continue
  5. Click Continue until you reach the screen titled Partnership - Other Information - Box 20Z - AG
  6. The program will proceed with the interview questions for you to enter or review the appropriate information

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