Total Stock Market Index - Section 199A dividends this year

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Electron
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Electron » Sun Feb 02, 2020 3:28 pm

Longtermgrowth wrote:
Sat Feb 01, 2020 10:44 pm
Anyone find it odd that my 1099-DIV only lists VTI (Vanguard Total Stock Market) as having Section 199A Dividends, while some of my other holdings have a higher % REITs? Example: DES (WisdomTree U.S. SmallCap Dividend Fund) with over 15% Real Estate...
That is a surprise with Vanguard passing through Section 199A dividends for a long list of their index funds.

It might be worth a call to your brokerage firm or WisdomTree. It's also possible that a revised 1099-DIV could be issued later this month.
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Longtermgrowth
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Longtermgrowth » Sun Feb 02, 2020 10:15 pm

Thanks for the replies to my question. I'm waiting for WisdomTree's 2019 Tax Supplement Report to be released, but it just crossed my mind to check their 2018 report, and there were no Section 199A Dividends listed for DES that year. My 1099-DIV may be correct.

On a side note, I went through the list House Blend linked towards the beginning of this thread, and had to laugh when noticing Vanguard's REIT Index (VNQ) had no Section 199A Dividends listed :)

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Electron
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Electron » Sun Feb 02, 2020 11:29 pm

Longtermgrowth wrote:
Sun Feb 02, 2020 10:15 pm
I'm waiting for WisdomTree's 2019 Tax Supplement Report to be released, but it just crossed my mind to check their 2018 report, and there were no Section 199A Dividends listed for DES that year.
I also reviewed the WisdomTree 2018 report and didn't see any Section 199A dividends listed at all for any of the funds.

The Vanguard Advisors spreadsheet referenced by House Blend is apparently a preliminary version. Vanguard generally releases 1099-DIV forms for the REIT Index funds in mid February. The reason for the delay is that REITs often reclassify income after the end of the tax year. One of my earlier posts in this thread includes REIT Index fund information from the final 2018 spreadsheet. Hopefully the final version of the 2019 spreadsheet will be available soon.
Electron

acegolfer
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Re: Total Stock Market Index - Section 199A dividends this year

Post by acegolfer » Mon Feb 03, 2020 11:19 am

FYI, FreeTaxUSA.com populates Form 8995 and enters # in 1040 Line 10 QBI.

OTOH, the IRS free file fillable doesn't have form 8995 to add.

mbasherp
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Re: Total Stock Market Index - Section 199A dividends this year

Post by mbasherp » Mon Feb 03, 2020 11:42 am

I’m really hoping that the IRS does offer 8995 on free file fillable forms. I’ve completed my return there, except for that! The IRS website says “to be determined” on when the form will be available on the platform.

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Hayden
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Hayden » Mon Feb 03, 2020 1:27 pm

The Turbotax forms availability site says the Form 8995A will be available 2/12. That's for the desktop version.

So in my case, it's not working correctly because TT isn't done with the form.

bikenfool
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Re: Total Stock Market Index - Section 199A dividends this year

Post by bikenfool » Mon Feb 03, 2020 6:45 pm

It shows here that 8995 will be available on freefilefillableforms on 2/6.
https://www.freefilefillableforms.com/# ... ailability

What a pain for a little deduction.

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runner26
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Re: Total Stock Market Index - Section 199A dividends this year

Post by runner26 » Mon Feb 03, 2020 8:50 pm

runner26 wrote:
Fri Jan 31, 2020 8:24 pm
Grogs wrote:
Mon Jan 27, 2020 7:36 am
Seems like TurboTax is handling this better than H&R Block. I went into my 1099-DIV, entered the massive $108 in Sec. 199A dividends, and absolutely nothing happened with the bottom line. I went to investigate, and it looks like a brain-dead error on the part of the software.

- On the form 8995, line 10 is 20% of the Sec. 199A, or $22 in my case
- Form 8995, line 14 is basically 20% of my taxable income, excluding qualified dividends.
- Form 8995, line 15 then says: "Enter the smaller of line 10 or line 14". That should be the $22 from line 10, but the software put $0 instead.
- When I overrode line 15 and put in the correct value ($22), nothing happened because it didn't update the 1040, line 10.
- Finally, I overrode the $0 on 1040, line 10, with $22 and my return increased by $12.

The $12 had me scratching my head for a minute since $22*24% = $5.28, but then I remembered the tax tables. The $22 was enough to drop me to the next lower $50 increment, so I got $50*24%=$12 instead. With such a small amount of 199A income, it could easily have gone the other way and then I would have seen no change at all.

Unfortunately, one can't efile using override values. I'll either have to wait until the form gets fixed, or just ignore the whole thing. For people with much larger Sec. 199A dividends, it may be worth the hassle of engaging with HRB to try and get it fixed. :annoyed
I tried reporting this error with the software and form 8995 to the technical support staff via chat. After 5 minutes or so the person said she couldn't figure out how to use the form and that I would need to communicate with a tax expert on the issue. I asked her to forward the problem to a tax expert and have them respond to me by e-mail that they were going to fix their software. She said she has no way to forward reported problems.

I do not want to upgrade my service to be able to talk to tax experts about my return. :annoyed

In the past I had no problems communicating problems I found in Tax Act and with Turbo Tax. It seems impossible with H&R Block. I guess I will see if they correct the problem in the Feb 13 update. If not I will manually override and submit a printed return via mail and never use their product again.
I was playing around with the H&R Block software and found that if I do the following (possible work around?):
Click on Deductions
click on Qualified Business Income Deductions
click on I want to combine my businesses
Then enter the correct amount in the QBI deduction field
then
The 8995 form disappears, but the 8995-A form fills out with the QBI deduction and line 10 on the 1040 populates with the correct value.

The problem I see is that 8995-A is not what I should be filling out for my income level, and I really have no business to combine, but this may not matter. Does anyone have opinions on this?

NotWhoYouThink
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Re: Total Stock Market Index - Section 199A dividends this year

Post by NotWhoYouThink » Wed Feb 05, 2020 4:02 pm

Makefile wrote:
Tue Jan 21, 2020 10:34 am
My 1099-DIV just posted.

Looks like Total Stock Market (VTSAX) dividends were about 93.8% qualified this year.
Looks like another 5.8% of dividends are section 199A (REIT?) dividends that I suppose are eligible for the 20% deduction. That's new this year.

(edit: "this year" meaning this tax season. 2019 taxes, of course)
Thanks for starting this thread for all of us developing a sudden interest in 199A and QBI. TurboTax seems to be handling it well, but they say the form is not yet ready to file. Not a problem for me yet, still waiting for a couple of other pieces of data.

clip651
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Re: Total Stock Market Index - Section 199A dividends this year

Post by clip651 » Thu Feb 06, 2020 3:58 pm

clip651 wrote:
Mon Jan 27, 2020 2:03 pm
Anyone using TaxAct this year willing to share your experience with how TaxAct handled this?

thanks,
cj
Well I can report on this myself, now that I've received my various tax forms and completed my taxes. TaxAct Premier download version handled this just fine, no hassles. It generated the 8995 appropriately after I filled in the details for the 1099DIV. The 8995 adds an extra page to my return, and gives me a very small tax deduction. Fine by me.

Thanks to everyone here for all the information on this, so I knew to watch for it on my taxes this year. After a few years of holding VTSAX, I wouldn't have been watching for and understood this change otherwise.

cj

50/50
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Re: Total Stock Market Index - Section 199A dividends this year

Post by 50/50 » Thu Feb 06, 2020 4:10 pm

DrCheese wrote:
Thu Jan 23, 2020 3:04 pm
Can you post a screenscrape of how turbotax filled out Form 8995? Use fictitious numbers if you prefer.

[/quote]

Here are step by step directions.

On form 8995

Line 6, place Section 199a dividends from 1099-Div box 5 (in attached example, I had $5,000 in Section 199a dividends in Box 5)
Line 7, carryover from last year (should be 0)
Line 8, Line 6 plus line 7
Line 9 Multiple line 8 * .20
Line 10 Add line 5 + 9 (line 5 should be zero so you are just copying line 9)
Line 11 This is line 8b from 1040 (adjusted gross income $68,000) - line 9 from 1040 (standard deduction or deduction from Schedule A $12,200)
Line 12 Total of Capital Gains from Schedule D
Line 13 Subtract line 12 from line 11
Line 14 Multiple line 13 * .2 (this is your maximum Qualified Business Income Deduction)
Line 15 Enter the lessor of Line 10 or 14 (this is just the actual Qualified Business Income Deduction or the maximum Qualified Business Income Deduction whichever is lower)

That is it for form 8995.

On Form 1040, Put line 15 from form 8995 on line 10

Image Image
[/quote]

Thanks DrCheese, your post really helped me with this deduction. I appreciate you taking the time to do this in such detail.

50/50

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Hayden
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Hayden » Fri Feb 07, 2020 3:05 pm

Now TT is saying the 8995A form won't be ready until 2/20.

cas
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Re: Total Stock Market Index - Section 199A dividends this year

Post by cas » Fri Feb 07, 2020 3:25 pm

Hayden wrote:
Fri Feb 07, 2020 3:05 pm
Now TT is saying the 8995A form won't be ready until 2/20.
The IRS has not (as of a search I did right now) released a final version of the instructions for the 2019 Form 8995A. They are still in draft version. I suspect Turbotax (or any of the other software packages) can't proceed until the IRS finalizes the instructions.

retiringwhen
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Re: Total Stock Market Index - Section 199A dividends this year

Post by retiringwhen » Fri Feb 07, 2020 3:46 pm

cas wrote:
Fri Feb 07, 2020 3:25 pm
Hayden wrote:
Fri Feb 07, 2020 3:05 pm
Now TT is saying the 8995A form won't be ready until 2/20.
The IRS has not (as of a search I did right now) released a final version of the instructions for the 2019 Form 8995A. They are still in draft version. I suspect Turbotax (or any of the other software packages) can't proceed until the IRS finalizes the instructions.
According to TurboTax, 2019 Form 8606 is not ready yet either. But it seems like the IRS site had an update on the 29th of January. Anyone else held up by the incomplete 8606 form in TurboTax?

surftheweb
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Re: Total Stock Market Index - Section 199A dividends this year

Post by surftheweb » Sun Feb 09, 2020 11:19 pm

I have been using a spreadsheet to calculate the total federal tax amount for shares of VTSAX that I own for withholding purposes. Can someone detail the calculations needed now that 199A is involved?

For example, assume:
1000 shares of VTSAX owned in 2019
Dividend Distribution per Share $1.4061
Total Dividends $1406.10
QDI Percentage 93.79%
Section 199A Percentage 5.85%

Federal Non-Qualified Tax Rate 35.00%
Federal Qualified Tax Rate 15.00%
Federal Net Investment Income Tax Rate 3.80%

I'm trying to figure out the calculation for Federal Tax dollars owed for the year given the above information. Thanks for any help.

retiringwhen
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Re: Total Stock Market Index - Section 199A dividends this year

Post by retiringwhen » Mon Feb 10, 2020 9:05 am

surftheweb wrote:
Sun Feb 09, 2020 11:19 pm
I have been using a spreadsheet to calculate the total federal tax amount for shares of VTSAX that I own for withholding purposes. Can someone detail the calculations needed now that 199A is involved?

For example, assume:
1000 shares of VTSAX owned in 2019
Dividend Distribution per Share $1.4061
Total Dividends $1406.10
QDI Percentage 93.79%
Section 199A Percentage 5.85%

Federal Non-Qualified Tax Rate 35.00%
Federal Qualified Tax Rate 15.00%
Federal Net Investment Income Tax Rate 3.80%

I'm trying to figure out the calculation for Federal Tax dollars owed for the year given the above information. Thanks for any help.
Here is the general formula

OrdinaryRate = Marginal Federal Tax Rate

Federal Taxes = # Shares * (DividendPerShare * ( %QDI * QDIRate + %QBI * OrdinaryRate * .8 + (1 - %QDI - %QBI) * OrdinaryRate) + STCGDistributionPerShare * OrdinaryRate + LTCGDistributionPerShare * QDIRate)

$222.62 = 1000 * (1.4061 * (0.9379 * 0.15 + 0.0585 * 0.35 * 0.8 + (1 - 0.0585 - 0.9379) * 0.35) + 0 * 0.35 + 0 * 0.15)

BTW, at the rates you quotes, your marginal rates are most likely 38.8% for Ordinary Income due to NIIT and QDI/LTCG rates would be 18.8% That in turn would look like this:

$275.43 = 1000 * (1.4061 * (0.9379 * 0.188 + 0.0585 * 0.388 * 0.8 + (1 - 0.0585 - 0.9379) * 0.388) + 0 * 0.388 + 0 * 0.188)

Edit: I accidentally used QDI instead of OrdinaryRate for STCG, didn't change the value of the example requested though, fixed here for other who may wish to apply to other examples. Edit #2 - fixed dividend rate typo, noted below in next response, to ensure calculation is correct to reality.
Last edited by retiringwhen on Mon Feb 10, 2020 2:04 pm, edited 1 time in total.

surftheweb
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Re: Total Stock Market Index - Section 199A dividends this year

Post by surftheweb » Mon Feb 10, 2020 1:50 pm

retiringwhen wrote:
Mon Feb 10, 2020 9:05 am
Federal Taxes = # Shares * (DividendPerShare * ( %QDI * QDIRate + %QBI * OrdinaryRate * .8 + (1 - %QDI - %QBI) * OrdinaryRate) + STCGDistributionPerShare * OrdinaryRate + LTCGDistributionPerShare * QDIRate)
Thanks for the info retiringwhen. It was very useful in helping me modify my withholding calculations for 199A dividends. I did notice a small typo in your example numbers for VTSAX (DividendPerShare = 1.4061). Thanks!

fourwheelcycle
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Re: Total Stock Market Index - Section 199A dividends this year

Post by fourwheelcycle » Mon Feb 10, 2020 5:47 pm

I sat down today to do my taxes. All went fine until the very last step. I even had a nice refund coming. On the final review TurboTax Deluxe Desktop for Mac told me it only found one problem - I cannot submit my taxes because TurboTax is not yet ready with a necessary version update to handle the 199A dividends reported in my Vanguard 1099-DIV.

Lyrrad
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Lyrrad » Mon Feb 10, 2020 7:39 pm

fourwheelcycle wrote:
Mon Feb 10, 2020 5:47 pm
I sat down today to do my taxes. All went fine until the very last step. I even had a nice refund coming. On the final review TurboTax Deluxe Desktop for Mac told me it only found one problem - I cannot submit my taxes because TurboTax is not yet ready with a necessary version update to handle the 199A dividends reported in my Vanguard 1099-DIV.
This is likely because the instructions for the new Form 8995-A are not yet finalized. Once those instructions are released by the IRS, tax software publishers should be able to complete the form. The estimated availability of this form has been pushed back a few times by both TurboTax and H&R Block.

mms
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Re: Total Stock Market Index - Section 199A dividends this year

Post by mms » Tue Feb 11, 2020 2:04 pm

Both Vanguard Total Stock Market Index Fund and Vanguard Large Cap Index Fund have 199A dividends listed in Box 5 of the 1099DIV. This is a legitimate deduction to take even though I don’t own a business? FreeTaxUSA Calculated a $40 deduction using Schedule C. Should Form 8995 be completed also or in lieu of Schedule C? Can passive investors in mutual funds take this deduction?
MMS

colodane
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Re: Total Stock Market Index - Section 199A dividends this year

Post by colodane » Tue Feb 11, 2020 6:47 pm

I'm no tax expert, but I just went through this when I did my return yesterday. I see no reason to involve Schedule C. I just used the 8995 form as suggested earlier here in this forum. Kind of annoying to need another form for what was in my case a very small gain, but turned out to be simple to fill out. The result of the form is entered into the 1040 on line 10 as an increase in the standard or itemized deduction.

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BolderBoy
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Re: Total Stock Market Index - Section 199A dividends this year

Post by BolderBoy » Tue Feb 11, 2020 7:39 pm

So I did a little experiment with the H&R Block tax software as of today.

Finished my return and the 1040 line 10 shows $0.00 as I expected. I have VTSAX and there is $200.11 in Box 5 on the 1099-DIV, but there is no "business" entity defined on the return. IRS regs: QBI deduction requires a business relationship (right?)

I added a Sched C with zero income and zero deductions. Now the 1040 line 10 = $40.00 and Form 8995 with the proper calculations has been added to the return, .

Chuckling to myself, I deleted the Sched C and the Form 8995. Lo! The 1040 line 10 still shows $40.00.

Closed the program, restarted...the line 10 $40.00 deduction is still there.

Deleted the VG 1099-DIV...the line 10 $40.00 deduction is still there. Where is it getting the info to make such a calculation - I deleted them all?

If I'm reading the IRS regs correctly, the QBI deduction is only available if you have a business, such as, for example, would be reported on Sched C. If Sched C isn't there, why is the tax software giving me a line 10 $40.00 deduction even if I delete Form 8995 and the 1099-DIV (from which the line 10 deduction is derived?)

I think that H&R Block has some more work to do on the QBI deduction.

Anyone else have any ideas?
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

Lyrrad
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Lyrrad » Tue Feb 11, 2020 11:12 pm

Lyrrad wrote:
Mon Feb 10, 2020 7:39 pm
fourwheelcycle wrote:
Mon Feb 10, 2020 5:47 pm
I sat down today to do my taxes. All went fine until the very last step. I even had a nice refund coming. On the final review TurboTax Deluxe Desktop for Mac told me it only found one problem - I cannot submit my taxes because TurboTax is not yet ready with a necessary version update to handle the 199A dividends reported in my Vanguard 1099-DIV.
This is likely because the instructions for the new Form 8995-A are not yet finalized. Once those instructions are released by the IRS, tax software publishers should be able to complete the form. The estimated availability of this form has been pushed back a few times by both TurboTax and H&R Block.
I noticed today that TaxAct supports the form, so I was incorrect that the final instructions are needed for tax software to file the form. I was able to successfully redo my taxes and efile my return this evening. (There's another thread about a discount that's available if one files by Feb 27)

acegolfer
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Re: Total Stock Market Index - Section 199A dividends this year

Post by acegolfer » Wed Feb 12, 2020 8:08 am

mms wrote:
Tue Feb 11, 2020 2:04 pm
Both Vanguard Total Stock Market Index Fund and Vanguard Large Cap Index Fund have 199A dividends listed in Box 5 of the 1099DIV. This is a legitimate deduction to take even though I don’t own a business? FreeTaxUSA Calculated a $40 deduction using Schedule C. Should Form 8995 be completed also or in lieu of Schedule C? Can passive investors in mutual funds take this deduction?
I used FreeTaxUSA last week to efile. It generated 8995 but not schedule C. This morning, I received the refund at my bank. Like you, I'm a passive investor in VTSAX.

prd1982
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Re: Total Stock Market Index - Section 199A dividends this year

Post by prd1982 » Wed Feb 12, 2020 8:33 am

BolderBoy wrote:
Tue Feb 11, 2020 7:39 pm
So I did a little experiment with the H&R Block tax software as of today.
...
I think that H&R Block has some more work to do on the QBI deduction.

Anyone else have any ideas?
I think a number of folks on this forum think passive investors also get this credit. Personally, I don't have a clue. But I think the best bet is to wait until your tax program completes its update to the 8995 and 8995-A forms and flows.

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House Blend
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Re: Total Stock Market Index - Section 199A dividends this year

Post by House Blend » Wed Feb 12, 2020 10:52 am

I don't see why folks are getting intimidated into thinking that they cannot file Form 8995 unless they have a business.

The instructions for Form 8995 seem clear enough to me.

In particular those instructions make it explicit that qualified REIT dividends do NOT count as QBI. The form handles those categories separately.

And the instructions explicitly mention qualified REIT dividends received from RICs (i.e., funds) and reported on a 1099-DIV.

In any case I will be filing this form just for those amounts on my 1099-DIV.

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Electron
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Electron » Wed Feb 12, 2020 2:23 pm

mms wrote:
Tue Feb 11, 2020 2:04 pm
Both Vanguard Total Stock Market Index Fund and Vanguard Large Cap Index Fund have 199A dividends listed in Box 5 of the 1099DIV. This is a legitimate deduction to take even though I don’t own a business?
See the Michael Kitces article I quoted earlier in this thread.

"By contrast, qualified REIT dividends simply obtain the 20% Section 199A deduction, implicitly counting as a real estate “business” (by virtue of a REIT’s size and scale), and without any high-income limitations on the deduction!"

https://www.kitces.com/blog/reit-real-e ... deduction/
Electron

mms
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Re: Total Stock Market Index - Section 199A dividends this year

Post by mms » Thu Feb 13, 2020 1:45 pm

Thanks Electron - I read the Kitces post and a number of the replies to my query. Looks like Form 8995 is the way to go.
MMS

Compound
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Compound » Thu Feb 13, 2020 9:26 pm

cas wrote:
Fri Feb 07, 2020 3:25 pm
Hayden wrote:
Fri Feb 07, 2020 3:05 pm
Now TT is saying the 8995A form won't be ready until 2/20.
The IRS has not (as of a search I did right now) released a final version of the instructions for the 2019 Form 8995A. They are still in draft version. I suspect Turbotax (or any of the other software packages) can't proceed until the IRS finalizes the instructions.
For those that are interested, the IRS 8995a instructions are now available:

https://www.irs.gov/pub/irs-pdf/i8995a.pdf

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runner26
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Re: Total Stock Market Index - Section 199A dividends this year

Post by runner26 » Fri Feb 14, 2020 4:28 pm

Just got a new software update from H&R Block. The 8995 problem of not correctly reporting the deduction was fixed. Line 10 on 1040 is now being populated. :sharebeer

an_asker
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Re: Total Stock Market Index - Section 199A dividends this year

Post by an_asker » Fri Feb 14, 2020 4:30 pm

cas wrote:
Tue Jan 21, 2020 12:11 pm
Makefile wrote:
Tue Jan 21, 2020 10:34 am
My 1099-DIV just posted.

Looks like Total Stock Market (VTSAX) dividends were about 93.8% qualified this year.
Looks like another 5.8% of dividends are section 199A (REIT?) dividends that I suppose are eligible for the 20% deduction. That's new this year.
Thanks for the heads up. I'm surprised this thread isn't roaring away with people who have discovered a sudden interest in the details of the QBI deduction.

I know I've discovered a sudden, unanticipated interest in the QBI deduction. But after clicking through multiple IRS publications, I'm still not 100% sure how all this is going to play out. I hope Turbotax has it figured out properly. Given that some of the relevant IRS documents are still marked "Draft" for 2019, I have some sympathy for them.

(And then there is the issue of "Why 2019, but not 2018?" Google seems to think that the issue of how REIT potential-QBI income was handled by RICs was still in "new proposed regulation" form at this time last year, but I don't know if that is the answer or not.)
What, if I may ask, Is QBI?

Before I get the typical suggestion to Google, I must share the forum folks dislike googling, especially when someone posts tickers. "QBI" is a new one on me for sure!

prd1982
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Re: Total Stock Market Index - Section 199A dividends this year

Post by prd1982 » Fri Feb 14, 2020 4:37 pm

runner26 wrote:
Fri Feb 14, 2020 4:28 pm
Just got a new software update from H&R Block. The 8995 problem of not correctly reporting the deduction was fixed. Line 10 on 1040 is now being populated.
Note that if you need to use 8995-A (e.g. high income), H&R Block is still not fixed. It is scheduled for March 5.

The 199A dividends is all part of QBI, or Qualified Business Income. For many of us, we get this because we have mutual funds which contain REITS, which generate QBI.

retiringwhen
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Re: Total Stock Market Index - Section 199A dividends this year

Post by retiringwhen » Fri Feb 14, 2020 5:18 pm

an_asker wrote:
Fri Feb 14, 2020 4:30 pm
What, if I may ask, Is QBI?

Before I get the typical suggestion to Google, I must share the forum folks dislike googling, especially when someone posts tickers. "QBI" is a new one on me for sure!
I typed "what is QBI?" into Google and this was the first link

https://www.irs.gov/newsroom/qualified- ... -deduction

I will refrain from snarky comments. :annoyed

CoastalWinds
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Re: Total Stock Market Index - Section 199A dividends this year

Post by CoastalWinds » Fri Feb 14, 2020 8:29 pm

retiringwhen wrote:
Fri Feb 14, 2020 5:18 pm
an_asker wrote:
Fri Feb 14, 2020 4:30 pm
What, if I may ask, Is QBI?

Before I get the typical suggestion to Google, I must share the forum folks dislike googling, especially when someone posts tickers. "QBI" is a new one on me for sure!
I typed "what is QBI?" into Google and this was the first link

https://www.irs.gov/newsroom/qualified- ... -deduction

I will refrain from snarky comments. :annoyed
Just because your google search returned the poster’s intended use of QBI doesn’t mean the individual asking the question, had they googled, would have known that was the intent. For example: What if I use the acronym PSA? Do you know what that is as I’m using it?

Google says: Prostate-Specific Antigen. Shall we just go with that? Nope, the intent was Public Service Announcement.

Bulgogi Head
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Bulgogi Head » Fri Feb 14, 2020 8:33 pm

Will turbo tax do this deduction automatically for you when you import directly from Vanguard? Or is this something that has to be done manually?

retiringwhen
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Re: Total Stock Market Index - Section 199A dividends this year

Post by retiringwhen » Fri Feb 14, 2020 10:06 pm

Bulgogi Head wrote:
Fri Feb 14, 2020 8:33 pm
Will turbo tax do this deduction automatically for you when you import directly from Vanguard? Or is this something that has to be done manually?
TT did create all of this automatically for my Vanguard 1099-B forms. As usual, the entry of US Gov't Obligations continues to be a manual task, but since the 199A dividends have been added to the 1099-B and 1099-DIV forms, TT doesn't need any human help.

CoastalWinds
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Re: Total Stock Market Index - Section 199A dividends this year

Post by CoastalWinds » Fri Feb 14, 2020 10:29 pm

retiringwhen wrote:
Fri Feb 14, 2020 10:06 pm
Bulgogi Head wrote:
Fri Feb 14, 2020 8:33 pm
Will turbo tax do this deduction automatically for you when you import directly from Vanguard? Or is this something that has to be done manually?
TT did create all of this automatically for my Vanguard 1099-B forms. As usual, the entry of US Gov't Obligations continues to be a manual task, but since the 199A dividends have been added to the 1099-B and 1099-DIV forms, TT doesn't need any human help.
Is the entry of US Govt obligations solely for the benefit of a state return? Or is there any tax reduction benefit on the federal return?

retiringwhen
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Re: Total Stock Market Index - Section 199A dividends this year

Post by retiringwhen » Fri Feb 14, 2020 10:38 pm

CoastalWinds wrote:
Fri Feb 14, 2020 10:29 pm
retiringwhen wrote:
Fri Feb 14, 2020 10:06 pm
Bulgogi Head wrote:
Fri Feb 14, 2020 8:33 pm
Will turbo tax do this deduction automatically for you when you import directly from Vanguard? Or is this something that has to be done manually?
TT did create all of this automatically for my Vanguard 1099-B forms. As usual, the entry of US Gov't Obligations continues to be a manual task, but since the 199A dividends have been added to the 1099-B and 1099-DIV forms, TT doesn't need any human help.
Is the entry of US Govt obligations solely for the benefit of a state return? Or is there any tax reduction benefit on the federal return?
State only.

CoastalWinds
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Re: Total Stock Market Index - Section 199A dividends this year

Post by CoastalWinds » Fri Feb 14, 2020 10:39 pm

retiringwhen wrote:
Fri Feb 14, 2020 10:38 pm
CoastalWinds wrote:
Fri Feb 14, 2020 10:29 pm
retiringwhen wrote:
Fri Feb 14, 2020 10:06 pm
Bulgogi Head wrote:
Fri Feb 14, 2020 8:33 pm
Will turbo tax do this deduction automatically for you when you import directly from Vanguard? Or is this something that has to be done manually?
TT did create all of this automatically for my Vanguard 1099-B forms. As usual, the entry of US Gov't Obligations continues to be a manual task, but since the 199A dividends have been added to the 1099-B and 1099-DIV forms, TT doesn't need any human help.
Is the entry of US Govt obligations solely for the benefit of a state return? Or is there any tax reduction benefit on the federal return?
State only.
Thank you!

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abuss368
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Re: Total Stock Market Index - Section 199A dividends this year

Post by abuss368 » Fri Feb 14, 2020 10:49 pm

retiringwhen wrote:
Tue Jan 21, 2020 12:15 pm
cas wrote:
Tue Jan 21, 2020 12:11 pm
I hope Turbotax has it figured out better than I do.
I just ran a test return with the 2019 Turbotax for a return that has VTSAX in it. There was no prompting or places on the data entry forms to identify the amount that could attributed to QBI. If it is there, it is hidden.
This did work in 2018 with Free Tax USA. We received the deduction.
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HANK1964
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Re: Total Stock Market Index - Section 199A dividends this year

Post by HANK1964 » Sat Feb 15, 2020 11:21 am

When I received my 1099-DIV and noticed the entry in Box 5 for Total Stock Market Admiral I called Vanguard to inquire about it. The rep had no idea what I was talking about but asked if he could put me on hold while he asked others in his office if they knew what it was. When he came back on the line he told me that one of his colleagues had received an inquiry earlier that day and did some research to find out what the Box 5 entry meant. Apparently there was no internal communication at Vanguard to let the reps know how to field inquiries about this matter.

I have built my own Excel spreadsheet to emulate Form 1040 and the various schedules. Once I knew the significance of the Box 5 entry I built and integrated Form 8995 into my existing spreadsheet. There was a little trial and error involved because the Form 8995 instructions were not very clear.

It may seem odd but each year I buy Turbo Tax to confirm my spreadsheet calculations. This year it also confirmed I had properly integrated Form 8995 into my spreadsheet.

What I do not know is what triggers a 8995 versus a 8995-A? In my case Turbo Tax generated a 8995 and that is what I included in my return.

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Re: Total Stock Market Index - Section 199A dividends this year

Post by ruud » Sat Feb 15, 2020 12:10 pm

HANK1964 wrote:
Sat Feb 15, 2020 11:21 am
What I do not know is what triggers a 8995 versus a 8995-A? In my case Turbo Tax generated a 8995 and that is what I included in my return.
Apparently 8995A is required above certain income limits. From the 8995 instructions, 8995 can only be used (among other criteria) if:
Your 2019 taxable income before your QBI deduction is less than or equal to $160,700 ($160,725 if married filing separately or a married nonresident alien; $321,400 if married filing jointly
8995A is required otherwise.
"A good plan, violently executed now, is better than a perfect plan next week."

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Re: Total Stock Market Index - Section 199A dividends this year

Post by ofckrupke » Sat Feb 15, 2020 1:41 pm

Alan S. wrote:
Mon Jan 27, 2020 11:52 pm
Anyone know the extent of Sec 199A dividends reported by other broad index funds or ETFs of other large brokers such as Schwab or Fido?
Fidelity info, broken out per distribution like Vanguard's format-1 spreadsheet, is available in pdf and xlsx formats at https://institutional.fidelity.com/app/ ... 93327.html.
[The linked documents are most-recent-year: they will be replaced by 2020 versions once those are compiled in early 2021.]

FSKAX (Fido's TSM) isn't listed in the 199A file for 2019...because the fund reported 100% qualified dividends (probably pursuant to the 95+% rule), a fact revealed in the QDIV pdf linked from Qualified Dividend Flyer page (also subject to annual overwriting/replacement).

The 1099-Composite file I downloaded from Schwab earlier this week had a zero in box 5 of the 1099-DIV portion.
The unreported detail section breaks out qualified and non-qualified dividends by holding but is seemingly 199A-unaware.
[My holdings do include SCHB, the house brand ETF closest to TSM...and it did not report 100% QDIV so that is not the reason for the $0 in the 199A box on the 1099-DIV.]
Mark me as disappointed.

JimInIllinois
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Re: Total Stock Market Index - Section 199A dividends this year

Post by JimInIllinois » Sat Feb 15, 2020 2:45 pm

Is there any chance that Vanguard will re-issue 2018 1099-DIV forms to reflect 199A dividends? It seems that the tax law, structure, and composition of the funds is unchanged for 2019 so that 199A dividends could have been reported for 2018 if the regulations had been in place.

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Re: Total Stock Market Index - Section 199A dividends this year

Post by abuss368 » Sat Feb 15, 2020 3:16 pm

JimInIllinois wrote:
Sat Feb 15, 2020 2:45 pm
Is there any chance that Vanguard will re-issue 2018 1099-DIV forms to reflect 199A dividends? It seems that the tax law, structure, and composition of the funds is unchanged for 2019 so that 199A dividends could have been reported for 2018 if the regulations had been in place.
Vanguard had this information in 2018 for REIT funds.
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PinotGris
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Re: Total Stock Market Index - Section 199A dividends this year

Post by PinotGris » Sat Feb 15, 2020 3:22 pm

Did the Turbo Tax 2018 have a box for the 199A dividend? I don't think the 2018 Vanguards 1099-Div showed anything in this box.
Sorry if this question was already answered, I did not find it on my quick look.
Thanks

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fortyofforty
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Re: Total Stock Market Index - Section 199A dividends this year

Post by fortyofforty » Sat Feb 15, 2020 5:18 pm

cas wrote:
Tue Jan 21, 2020 12:23 pm
retiringwhen wrote:
Tue Jan 21, 2020 12:15 pm
cas wrote:
Tue Jan 21, 2020 12:11 pm
I hope Turbotax has it figured out better than I do.
I just ran a test return with the 2019 Turbotax for a return that has VTSAX in it. There was no prompting or places on the data entry forms to identify the amount that could attributed to QBI. If it is there, it is hidden.
Did you put something in Box 5 in the 1099-DIV entry form? During my googling, I think I read an intuit/turbotax community forum post that said you have to expand out the "more boxes" part of that entry form, so you can see Box 5, if you are entering by hand.

I decided to wait until Vanguard has the 1099-DIVs ready for automatic download into Turbotax and then look to see what Turbotax does with it. And then try re-reading the IRS publications with the filled out forms in front of me. But given that the QBI deduction can be dependent on other aspects of the tax return, I would guess that the complete answer of what Turbotax does with Box 5 stuff may not be clear after just the 1099-DIVs are entered.
I can confirm that. You have to expand the number of boxes, then Box 5 appears.
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Re: Total Stock Market Index - Section 199A dividends this year

Post by Duckie » Sat Feb 15, 2020 5:44 pm

PinotGris wrote:Did the Turbo Tax 2018 have a box for the 199A dividend?
If you enter data manually TurboTax only shows Box 5 if you expand the form. I don't know how it works if you download the brokerage data.
I don't think the 2018 Vanguards 1099-Div showed anything in this box.
My Vanguard's 2018 1099-DIV showed 0.00 for Box 5 and I held Total Stock Market. Since the 1099 showed nothing for that box, TurboTax showed nothing.

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Re: Total Stock Market Index - Section 199A dividends this year

Post by HANK1964 » Sat Feb 15, 2020 7:28 pm

When I talked to the rep at Vanguard he told me that Vanguard had the ability, starting in 2018, to report entries in Box 5 for Total Stock Market Admiral but didn’t. He did not know why. He did not give me the impression that he knew Vanguard would reissue 1099-DIVs for 2018 to handle this.

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Re: Total Stock Market Index - Section 199A dividends this year

Post by BolderBoy » Sun Feb 16, 2020 7:54 pm

I think the QBI issue has been fixed in the HRB software (Feb 14 update). It correctly entered the REIT amount from 1099-DIV box 5 onto the Form 8995 and the calculated deduction onto line 10 on the 1040. Without the need for any business nexus.
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