Form 8995, Qualified Business Income Deduction

Forum|Forum|5 years ago
April 7, 2021
1 reply
0 views

I should not have Form 8995 as part of my 2020 taxes. I own and rent a single family townhouse. When preparing for my 2019 Schedule E, I misread the requirement for Form 8995 and showed my rental real estate loss as a trade/business deduction without being able to take the 20%e of net income. For 2020 taxes, I will have the same situation as my Schedule E will have another small loss.

My question is how can I stop using Form 8995 as part of my 2020 taxes without possibly being flagged for audit .

Best answer by DianeW777

The single family townhouse rental can be removed from the qualified business income by taking the following steps.

Open your TurboTax return > Search (upper right) type rentals > Press enter > Click the Jump to ... link
Edit next to your rental activity > Scroll to Qualified Business Income > Edit/Update >
Select 'None of the above' on the Real Estate Professional page
Continue to the page Do you want to use a safe harbor.... Select 'None of these apply' > Continue
Select 'No', on the page Is this Qualified Business Income?

If you do not meet the safe harbor rules then you should follow this process to remove this rental from qualification.

The following requirements must be met by taxpayers or RPEs to qualify for this safe harbor:

Separate books and records are maintained to reflect income and expenses for each rental real estate enterprise.
For rental real estate enterprises that have been in existence less than four years, 250 or more hours of rental services are performed per year. For other rental real estate enterprises, 250 or more hours of rental services are performed in at least three of the past five years.
The taxpayer maintains contemporaneous records, including time reports, logs, or similar documents, regarding the following: hours of all services performed; description of all services performed; dates on which such services were performed; and who performed the services.
The taxpayer or RPE attaches a statement to the return filed for the tax year(s) the safe harbor is relied upon.
- Can I get QBID for my rental income?

D

DianeW777Answer

The single family townhouse rental can be removed from the qualified business income by taking the following steps.

Open your TurboTax return > Search (upper right) type rentals > Press enter > Click the Jump to ... link
Edit next to your rental activity > Scroll to Qualified Business Income > Edit/Update >
Select 'None of the above' on the Real Estate Professional page
Continue to the page Do you want to use a safe harbor.... Select 'None of these apply' > Continue
Select 'No', on the page Is this Qualified Business Income?

If you do not meet the safe harbor rules then you should follow this process to remove this rental from qualification.

The following requirements must be met by taxpayers or RPEs to qualify for this safe harbor:

Separate books and records are maintained to reflect income and expenses for each rental real estate enterprise.
For rental real estate enterprises that have been in existence less than four years, 250 or more hours of rental services are performed per year. For other rental real estate enterprises, 250 or more hours of rental services are performed in at least three of the past five years.
The taxpayer maintains contemporaneous records, including time reports, logs, or similar documents, regarding the following: hours of all services performed; description of all services performed; dates on which such services were performed; and who performed the services.
The taxpayer or RPE attaches a statement to the return filed for the tax year(s) the safe harbor is relied upon.
- Can I get QBID for my rental income?

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"