1099-DIV and K-1 Sec 199a Divs w/ H&R Block

[jaj2276]

I've read the threads on Sec 199a dividends but haven't seen my exact issue (or I missed it!) so hopefully someone here can point me in the right direction.

I'm using H&R Block Premium edition (desktop version) to do my 2020 taxes. I entered my 1099-DIV from Vanguard and there was a small amount of Sec 199a dividends. H&R Block picked these up and generated Form 8995-A by filling out Part IV. It took Form 8995-A Line 39 and put it on Form 1040 Line 13. All good as it seems it's the standard 20% of the Sec 199a dividend amount.

I then get a K-1 from an investment I have and it also has Sec 199a dividends. There is no box/code combination for Sec 199a dividends on the K-1 (at least from what I can tell). The Sec 199a dividends are mentioned only in the footnotes. Not sure if it matters or not, but this investment is with a business who trades financial instruments and in which I am an active participant.

Question 1: Does anyone know if there's a way of getting Sec 199a dividends from a K-1 in to H&R Block when entering K-1 information?

Playing around with the software, if I go to H&R Block -> Federal -> Deductions -> Qualified Business Income Deduction topic, there's a checkbox titled "I want to combine my businesses". If I click this checkbox, H&R Block takes me to a screen where I tell H&R Block what my QBI deduction should be. If I add the 1099-DIV and the K-1 Sec 199a amounts, multiply by 0.20, and enter that amount on this screen, then the return is changed in two ways.

-- Form 1040 Line 13 now has the amount I entered in the screen (i.e. 0.2*(1099-DIV + K-1)).
-- Form 8995-A has been removed. The cover page for the return mentions to manually prepare these forms.

Question 2: Are the K-1 Sec 199a dividends treated just like the 1099-DIV Sec 199a dividends? Basically should they both go on Part IV of 8995A?
Question 3: Any reason why I shouldn't use the 8995A that H&R Block created before I said "I want to combine my businesses" as a template and simply add in the K-1 Sec 199a div amounts ?
Question 4: Is there any thought that I might need to use Parts I-III of Form 8995 for these Sec 199a dividends since I actively participate in this business? I'm not trying to deduct business income per se so my first thought is I don't need to but then I am an active participant in the business so maybe I should?

Thanks in advance for any help!

[jaj2276]

Nothing like replying to my original post. Writing things out sometimes helps make clear the "obvious" solution.

-- I unchecked "I want to combine businesses" so that H&R Block would generate the 8995-A.
-- I entered an additional 1099-DIV that contained only the Sec 199a dividends listed in my K-1. This amount then flowed to 8995-A and finally to Form 1040.

[Tarkus]

I'm having the same issue with HRB this year. My kids got a K-1 from a trust, and the 199A REIT dividends are listed in Box 14, Code I. The software says "Our program doesn't support special handling for QBI on Schedule K-1 (Form 1041). We recommend that you work with a tax professional to help you complete your return."

I tried to hack it by entering a dummy 1099-DIV. I entered the 199A amount on line 5 ("Section 199A Dividends") -- however the 1099-DIV raises an issue when I do the accuracy review because the ordinary dividends are 0. I'm not exactly sure how to get past this!

[Tarkus]

After sleeping on it, I realized that if I had $500 of REIT dividends, I could mock up a 1099-DIV with:

• Ordinary dividends: $500
• Qualified dividends: $500
• Sec 199A dividends: $500

Then subtract $500 of Ordinary and Qualified dividends off of the K-1.

This flows the $500 to Form 8995. In my case, the tax was exactly the same since my kids did not qualify for a QBI deduction.

For future years, I am left wondering whether Turbotax would properly handle REIT dividends on a K-1. Does anybody know?

[Murdock7591]

I had nothing but trouble trying to e-file my 2022 Federal through the H&R software this year. I have an Estate 1041 K-1 which has values that are inputted into the 1040, and after numerous calls and escalations they finally sent me an email that stated this:

"We’ve done some additional research and have some information to help resolve your issue:

Unfortunately, the 2022 software program does not allow e-filing of returns with Form K-1 estate/trust 11 with code (A) for excess deductions section 679e. If you wish to include this in your return you will have to print and mail your return to the IRS. If you remove it you have the ability to e-file. The IRS rules and guidelines for e-filing change on a year to year basis and as of this year, e-filing with that code is no longer allowed. We apologize for any confusion or inconvenience this update caused, and appreciate all your patience while we researched a solution. "

What is crazy is that using the 2021 H&R software, I had no issue and it allowed me to e-file.

The best solution for me is to e-file without the K-1 information and then do an amendment with the K-1 (Doing the K-1 saves me $200 in Taxes)

[cas]

For future years, I am left wondering whether Turbotax would properly handle REIT dividends on a K-1. Does anybody know?

I do taxes for a relative who has 199A dividends on a K-1 from a trust (Sched K-1, Box 14, Code I, from REIT held within a mutual fund).

For 2021 tax year, Turbotax handled it just fine. (no complaints, e-file accepted, etc.)

There are also 199A dividends on the K-1 this year. Turbotax took it without complaint and seems to be doing the right things with it. But I'm still working on the return and haven't actually tried e-filing yet. I'm not expecting problems, but I mention that in the interest of full disclosure.

[sandramjet]

For future years, I am left wondering whether Turbotax would properly handle REIT dividends on a K-1. Does anybody know?

I do taxes for a relative who has 199A dividends on a K-1 from a trust (Sched K-1, Box 14, Code I, from REIT held within a mutual fund).

For 2021 tax year, Turbotax handled it just fine. (no complaints, e-file accepted, etc.)

There are also 199A dividends on the K-1 this year. Turbotax took it without complaint and seems to be doing the right things with it. But I'm still working on the return and haven't actually tried e-filing yet. I'm not expecting problems, but I mention that in the interest of full disclosure.

I have this same issue; wondering which version of TT I should try? Deluxe? Premier?

THanks