Qualified Business Income Deduction - Pass-Through S Corporation Income

Per the Instructions for Schedule K-1 (1120S), page 20:

Code V. 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 publicly traded partnerships (PTP) income from your S corporation. The S corporation will provide the information you need to figure your deduction. You will use one of these two forms to figure your QBI deduction.

  • AUse Form 8995, Qualified Business Income Deduction Simplified Computation, if:
    • You have QBI, section 199A dividends, or PTP income (defined below),
    • Your 2019 taxable income before the QBI deduction is equal to or less than $160,700 ($321,400 if married filing jointly or $160,725 if married filing separately), and
    • You aren’t a patron in a specified agricultural or horticultural cooperative.
  • Use Form 8995-A, Qualified Business Income Deduction, if you don’t meet all three of these requirements.

QBI pass-through entity reporting information. Use the information provided to you by your S corporation to complete the appropriate form identified above.

QBI or qualified PTP items subject to shareholder-specific determinations. The amounts reported to you reflect your pro rata share of items from the S corporation’s trade(s) or business(es), or aggregation(s) and may include items that aren’t includible in your calculation of the QBI deduction. When determining QBI or qualified PTP income, you must include only those items that are qualified items of income, gain, deduction, and loss included or allowed in determining taxable income for the tax year. To determine your QBI or your qualified PTP income amounts and for information on where to report them, see the instructions for Form 8995 or Form 8995-A.

To enter qualified business income 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 S Corporation income (Form 1120S 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 S Corporation - Schedule K-1 Information, then check the box in front of Box 17 - Other Information, and then click Continue
  5. Click Continue until you reach the screen titled S Corporation- Other Information - Box 17A - C
  6. The program will proceed with the interview questions for you to enter or review the appropriate information

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