Qualified Business Income Deduction - Pass-Through Partnership Income

Per IRS Partner's Instructions for Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. (For Partner's Use Only), page 17:

Code Z. Section 199A information. Generally, you may be allowed a deduction of up to 20% of your net qualified business income (QBI) plus 20% of your qualified REIT dividends, also known as section 199A dividends, and qualified PTP income from your partnership. The partnership will provide the information you need to figure your deduction. Use one of these forms to figure your QBI deduction.

  1. Use Form 8995, Qualified Business Income Deduction Simplified Computation, if all of the following apply.
    a. You have QBI, section 199A dividends, or PTP income (defined below), and
    b. Your 2021 taxable income before the QBI deduction is equal to or less than $163,300 ($326,600 if married filing jointly), and
    c. You aren’t a patron in a specified agricultural or horticultural cooperative.
  2. Use Form 8995-A, Qualified Business Income Deduction, if you don't meet all three of the above requirements.

Use the information provided by your partnership to complete the appropriate form listed above. For definitions and more information, see the Instructions for Form 8995 or the Instructions for Form 8995-A, as appropriate.

To enter the Qualified Business Income (QBI) information from Schedule K-1 in the TaxAct program:

  1. From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your screen, then click Federal).
  2. Click the Business Income dropdown, then click Partnership income (Form 1065 Schedule K-1).
  3. Click + Add Partnership Schedule K-1 to create a new copy of the form or click Edit to edit a form already created (desktop program: click Review instead of Edit).
  4. Continue with the interview process until you reach the screen titled Partnership - Schedule K-1 Information, then click the checkbox next to Box 20 - Other information.
  5. On the screen titled Partnership - Other Information, click Yes.
  6. Continue past the Partnership - Other Information - Box 20AA - AG entries, to the screen Qualified business income deduction information, and use the data entry fields to enter information from your K-1 Statement A.

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