John Bullis: What if my schedule K-1 omits section 199A information?
Section 199A provides up to a 20 percent special deduction of profits for having a business, an ownership in a partnership or S corporation (including a rental operation in most cases).
For example, if you own 25 percent of the entity then you probably received a Schedule K-1 form (information document like a W-2) that shows your share of the income. It also is to show in box 20 and/or attachments your share of special items that help you compute the Section 199A deduction (Wages paid and investment in fixed assets known as qualified property).
If your Schedule K-1 didn’t show anything about Section 199A deduction, perhaps you should ask for a CORRECTED Schedule K-1.
When you get a corrected Schedule K-1 with the Section 199A information, you can do an Amended Individual Income Tax Return (form 1040X) and claim the deduction. With an additional deduction for Section 199A, you’ll probably have a refund to claim.
It’s expected some Schedule K-1 forms won’t be complete by not including Section 199A information the new tax law allows.
It’s difficult to compile the required information for Section 199A. If the K-1 should show your share of income and your share of Section 199A information, then a corrected form Schedule K-1 is in order.
IRS will see a lot of corrected Schedule K-1 forms for 2018. The new tax law gives most business owners a special deduction that reduces the taxable income of the individual.
It’s all just a bother. The deduction can be claimed on an amended individual income tax return. All this just delays the refund a bit.
Since most of us aren’t perfect. The preparer of the Schedule K-1 can provide the corrected form. The new tax law isn’t that easy to understand.
Did you hear “We all like people with get up and go-especially after they have been visiting us for any length of time.”
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.