Apr 9, 2018 - As you work on preparing your 2018 income tax return, you may wonder how much income tax the new Section 199A deduction saves you.
. Enter K-1 information following your normal workflow. Scroll to the bottom of the K-1 to review Section D: Qualified Business Income Deduction info. Enter any adjustments to income or Unadjusted Basis Immediately after Acquisition. Check Yes or No if the business is a Specified Service Trade or Business. Link the K-1 to a new QBI Component worksheet by double-clicking the QBI worksheet to report field. Each entity that has Qualified Business Income will have a QBI Component worksheet that can be reviewed for accuracy.
The QBI Deduction Summary will net all the data used to calculate the Qualified Business Income Deduction. Enter information following your normal workflow. From the Open Forms menu (F6), type 199a to select the Section 199A Activity Worksheet. Enter any adjustments to Wages or Unadjusted Basis Immediately after Acquisition.
Check Yes or No if the business is a Specified Service Trade or Business. Each activity will be summarized on the Schedule K Other Info - Section 199A ( Schedule K-1 Other Info - 199A for Fiduciaries) and a Schedule K-1 Other Info - 199A statement for each partner, shareholder or beneficiary.
If the trust has taxable income, the program calculates a Qualified Business Income Deduction for Schedule E activities. For Schedule E:. Enter information on Schedule E with you normal workflow.
Review each property at the bottom of the Schedule E in the 'Qualified Business Income Deduction Information Smart Worksheet'. Link each property to a QBI Component Worksheet by double-clicking in Box K. You can link multiple activities to the same QBI Component Worksheet (aggregation).
Review the QBI Simple Worksheet. The Total QBI Deduction will appear on the QBI Summary Worksheet. Review the deduction at the bottom and use the QuickZoom to manually enter your QBI Deduction on Line 15a Statement, Line J. ProSeries will flow the deduction to this line in a future release. Important: The current version of ProSeries 2018 does not yet support Publicly Traded Partnerships.
Related Topics:. to view detailed scenarios including a calculation flowchart. The Tax Cuts and Jobs Act adds a new deduction for non-corporate taxpayers for qualified business income. The deduction reduces the less of taxable income or business income and is generally 20% of a Taxpayer's qualified business income (QBI) from a Partnership, S-Corporation, or Sole Proprietorship, defined as the net amount of items of income, gain(s), deduction(s), and loss with respect to the trade or business. Certain types of investment-related items are excluded from QBI, e.g., capital gains or losses, dividends, and interest income (unless the interest is properly allocable to the business). Taxpayers whose taxable income exceeds the threshold amount of $157,500 ($315,000 in the case of a joint return) are subject to limitations based on the W-2 wages and the un-adjusted basis in acquired qualified property.
The deduction is taken for Partnerships and S-Corporations at the Partner or Shareholder level. Trusts and Estates are eligible for the deduction. W-2 wages and the un-adjusted basis in acquired qualified property are apportioned between the trust or estate and the beneficiaries. Specified agricultural or horticultural cooperatives are also eligible for the deduction under special rules. Qualified Business Income includes only income effectively connected with a U.S. Trade or business (or Puerto Rico if all the income is subject to US tax). The deduction is intended to reduce the tax rate on qualified business income to a rate that is closer to the new Corporate tax rate.
Important: The Simplified worksheet will only generate if the taxpayer’s taxable income is below the phase-in threshold ($315,000 MFJ and $157,500 for all others). If their taxable income is higher, they will be required to use the complex worksheets. Approximately 86% of the time when preparing returns most of the data entry will be the same as in prior years, with a few additional questions to determine the categorization that is needed. With each schedule, there are questions to determine whether this a qualified trade or business as well as a 'specified service trade or business'. Did not find an answer to your question? Click to the Community to ask other professional preparers for assistance. Document ID: 000051816.
ProSeries. United States. Year 2018.