
Calculating the qualified business income deduction, section 199A, in ProConnect Tax
by Intuit•6• Updated 9 months ago
The qualified business income deduction (QBI) lets eligible business owners and some trusts and estates to deduct up to 20% of their QBI, plus 20% of qualified real estate investment trust (REIT) dividends, and qualified publicly traded partnership (PTP) income.
Once the required steps are completed, Intuit ProConnect will calculate the QBI deduction and generate Form 8995 or 8995-A for the return.
For more Schedule C resources, check out our Tax topics page for Schedule C where you'll find answers to the most commonly asked questions.
- Under Income in the left-hand menu, select Business Income (Sch C) or Farm Income (Sch F) and enter income and expenses according to normal workflow.
- For each activity, click on the Qual. Bus. Inc. Deduction section along the top of your screen.
- Check the Specified service trade or business (SSTB) box, if applicable.
- See instructions for Form 8995 for more information on SSTBs.
- Enter any amounts related to cooperatives that may apply:
- DPAD received from a specified cooperative
- QBI allocable to qualified payments received from cooperative
- W-2 wages allocable to qualified payments received from cooperative
- Enter an Aggregate Tax Identification Number if you are aggregating this activity with others on the return.
- Use the same Aggregate Tax Identification Number for each income activity you want aggregated together.
- Enter a Description of aggregated businesses and explanation of how they are allowed to be aggregated, if applicable. You only need to enter this explanation on one activity in the aggregation.
- Enter Explanation of change in aggregation from prior year, if applicable.
ProConnect Tax doesn’t automatically include most Schedule E rentals in QBI calculations due to guidance in IRS Pub. 535. However, the program will calculate QBI for Schedule E activities marked as land, self-rentals, real estate professionals, or as claiming safe harbor.
- Under Income in the left-hand menu, select Rental and Royalty Income (Sch E) and enter information according to normal workflow.
- For each activity, click on the Qual. Bus. Inc. Deduction section from the dropdown menu in the upper-right corner of the input screen.
- Check the Specified service trade or business (SSTB) box, if applicable.
- See instructions for Form 8995 for more information about SSTBs.
- Enter a number in Rental real estate enterprise number if claiming safe harbor, if applicable. This entry is required to generate a Section 199A Rental Real Estate Safe Harbor statement.
- If you want to combine multiple Schedule E properties into one safe harbor statement, enter the same rental real estate enterprise number for each.
- Enter an Aggregate Tax Identification Number, if you are aggregating this activity with others on the return.
- Use the same Aggregate Tax Identification Number for each income activity you want aggregated together.
- Enter a Description of aggregated businesses and explanation of how they are allowed to be aggregated, if applicable. You only need to enter this explanation for one activity in the aggregation.
- Enter Explanation of change in aggregation from prior year, if applicable.
- If the activities in Schedule E aren't land, a self-rental, a real estate professional, or claiming safe harbor, enter a 1 in Business is a qualified trade or business: 1=yes, 2=no [O] to force the QBI calculation.
- Under Schedule K, select Passthrough K-1's from the left menu.
- Enter K-1 information for the applicable activity following normal workflow.
- Follow the steps according to the return type:
- Partnership and S-Corp K-1: select Line 20 from the dropdown menu in the top-right corner of the input screen and scroll down to Section 199A (QBI) Information (20).
- Estate or Trust K-1: under Income in the left menu, select Passthrough K-1's. Then select Lines 12–20 from the dropdown menu in top-right corner of the input screen and scroll down to Other (20).
- Fill in the Section 199A grid with the information provided on the K-1.
These input fields are not overrides. The program assumes this activity qualifies when entries are made within this input section.
Where to see your results
Once the inputs are completed, ProConnect Tax will automatically generate Form 8995 or Form 8995-A based on return requirements. The QBI deduction will flow to line 13 of Form 1040 or 1040-SR, or line 13a of Form 1040-NR.
Form 8995 or 8995-A are generated if:
- The client has QBI, qualified REIT dividends, or qualified PTP income or loss; and
- The client's taxable income before QBI deduction is at or below $163,300 ($326,600 if married filing jointly); or
- Client is a patron in a specified agricultural or horticultural cooperative.
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