![]() ![]() Taxpayers can claim the QBI deduction for Section 199A dividends regardless of their level of income. The QBI deduction for self-employment income is generally subject to taxable income limitations on the ability to claim the deduction. There is no income limit (taxable income, MAGI, or otherwise) on the ability to claim the Section 199A qualified business income deduction for Section 199A dividends.Since Box 1a reports all of the dividends, Box 5 must be equal to or less than Box 1a. The full pie of dividends, “total ordinary dividends,” is reported in Box 1a of Form 1099-DIV. Section 199A dividends are a slice of the pie of dividends.There are several things to keep in mind when considering Section 199A dividends: She gets a $200 qualified business income deduction on her federal tax return (20 percent of $1,000.00) because of the $1,000.00 of Section 199A dividend. The mutual fund pays her $1,000.00 of dividends, all of which are Section 199A dividends reported to her in both Box 1a and Box 5 of Form 1099-DIV. Here is an example of how the tax deduction works for Section 199A dividends.Ĭatherine owns shares of ABC REIT Mutual Fund. The qualified business income deduction is a 20 percent federal income tax deduction. This is also referred to as the QBI deduction. What is the Tax Benefit of a Section 199A Dividend?Ī Section 199A dividend qualifies for the Section 199A qualified business income deduction. Watch me discuss VTSAX and Section 199A dividends. ![]()
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