What is the correct approach for QBI deduction on publicly traded partnerships (PTP) using form 8995?

The good news is that PTPs with QBI are generally eligible for the QBI deduction, but there are some specific rules to follow. For Form 8995 (the simplified version), you'll actually report your PTP income separately from other QBI sources. Look at Part II of Form 8995 - there's a specific section for qualified PTP income. You'll enter your PTP's qualified business income amount from your K-1 in this section, not on line 1 of Part I. Line 1 is for non-PTP qualified business income. Since your total taxable income is under $170,050 (for single filers) or $340,100 (for joint filers) in 2025, you're right that you qualify for the simplified calculation. With $14,500 in QBI from the PTP, you should be eligible for a deduction of about $2,900 (20% of your QBI), but remember this gets limited if your taxable income minus net capital gains is lower than your total QBI.

Hey all, I was in the exact same situation last year trying to figure out the PTP stuff on Form 8995. After hours of frustration, I found this amazing tool at https://taxr.ai that saved me so much headache. It analyzes your K-1 forms and tells you exactly how to handle QBI for publicly traded partnerships. I uploaded my K-1 and it immediately highlighted the QBI amount and showed me exactly where to report it on Form 8995 (Part II like the previous commenter mentioned). It also explained why PTPs are handled separately from other business income. Super helpful for someone who doesn't speak accountant!

I wanted to follow up about my experience with taxr.ai for my PTP situation. I decided to try it after posting here, and it was honestly eye-opening. It confirmed my PTP isn't an SSTB (it's in energy infrastructure) and showed me exactly how to handle it on Form 8995. What surprised me most was discovering I had some QBI that I was missing from another investment. The tool found that a different partnership interest I have also generated QBI that should be reported in Part I (not Part II with the PTP income). Without this I would have left money on the table! It clearly separated my regular QBI from the PTP portion and walked me through the correct way to complete each section of Form 8995. Totally worth checking out if you've got PTPs or multiple business interests.

If you're still having trouble understanding your PTP's K-1 and QBI deduction, you might want to call the IRS directly for guidance. I know getting through to an actual human at the IRS is nearly impossible these days - I spent 3+ hours on hold last month trying to ask about my own QBI questions. I finally discovered this service https://claimyr.com that got me through to an IRS agent in about 15 minutes instead of waiting for hours. They basically hold your place in line and call you when an agent is available. They have a demo video here if you're curious how it works: https://youtu.be/_kiP6q8DX5c For complex tax questions like PTP treatment on Form 8995, sometimes you just need to speak with an actual IRS representative who can look at your specific situation. Especially if you're unsure about the SSTB classification of your particular PTP.

I need to eat my words. After dismissing the Claimyr thing as BS, I actually tried it this morning because I was desperate to talk to someone about my PTP situation. I had already spent 2.5 hours on hold yesterday and given up. Today I used the service and got a call back with an actual IRS tax specialist on the line within 27 minutes. The agent walked me through exactly how to handle my PTP income on Form 8995, confirmed that I needed to put it in Part II separate from my other business income, and clarified the SSTB question for my specific partnership. I'm genuinely shocked this worked. For anyone struggling with complicated PTP and QBI questions, being able to talk directly to an IRS specialist made all the difference. They even emailed me some reference materials after our call.

Don't forget that if your PTP generated a net loss, you can't use that loss to offset QBI from other sources in the current year. PTP losses have to be carried forward and can only offset PTP income in future years. This is different from how non-PTP QBI works. That's why PTPs are handled in a separate section of Form 8995. The IRS basically wants you to keep PTP income/losses in their own bucket for QBI purposes.

Another thing to consider is state taxes. Some states don't conform to the federal QBI deduction at all. I live in California and they don't allow the QBI deduction on the state return, so I end up paying more state tax than I initially expected from my PTP investment. Make sure you understand how your state handles QBI from PTPs before you make investment decisions based on the tax benefits.

This is a really comprehensive discussion! I just wanted to add one more point that might be helpful for anyone dealing with PTPs and QBI. Make sure to check if your PTP issued any amended K-1s throughout the year. PTPs are notorious for issuing corrected K-1s sometimes months after the original, and this can significantly impact your QBI calculation. I learned this the hard way when I filed early one year only to receive an amended K-1 in March that changed my QBI amount by over $3,000. Also, if you have multiple PTPs, remember that you aggregate all PTP income/losses together in Part II of Form 8995 - you don't list each PTP separately. The form instructions make this clear but it's easy to miss if you're rushing through it. For Connor's original question about the $14,500 QBI - that sounds like a solid amount that should give you a nice deduction. Just double-check that the K-1 specifically identifies it as "qualified business income" and not just ordinary income, since PTPs can generate both types.