U.S. · Tax forms
K-1 box 20 code Z.
Section 199A information: the numbers behind your QBI deduction.
Code Z on a partnership Schedule K-1 (Form 1065) is not a deduction. It is the partnership’s statement of the section 199A figures you need: your share of qualified business income items, W-2 wages, the unadjusted basis of qualified property, and section 199A dividends. You use them on Form 8995 or Form 8995-A to figure your own deduction of up to 20% of qualified business income.
Which QBI form does code Z feed?
Result
What the code Z statement can contain
| Item | What it is | Where it goes |
|---|---|---|
| QBI or qualified PTP items | Your distributive share of income, gain, deduction and loss from each trade, business or aggregation. These are partner-specific: only items that count in your taxable income are used. | Form 8995 or 8995-A |
| W-2 wages | Your share of the partnership’s W-2 wages allocable to the QBI of each qualified trade, business or aggregation. | Wage and UBIA limits; Form 8995-A when over the threshold |
| UBIA of qualified property | Your share of the unadjusted basis immediately after acquisition of qualified property for each trade, business or aggregation. | Form 8995-A |
| Section 199A dividends | Your share of the partnership’s net section 199A dividends (qualified REIT dividends). | Form 8995 or 8995-A |
| Cooperative patron status | Tells you the partnership was a patron of a specified agricultural or horticultural cooperative. | Form 8995-A plus Schedule D (Form 8995-A) |
| Items from cooperative payments | QBI items and W-2 wages allocable to qualified payments from specified cooperatives, and your share of the section 199A(g) deduction. | Form 8995-A |
Which form: 8995 or 8995-A
The 2025 Schedule K-1 instructions give three tests for the simplified Form 8995: you have QBI, section 199A dividends or PTP income; your 2025 taxable income before the QBI deduction is at or under $197,300 ($394,600 if married filing jointly); and you are not a patron in a specified agricultural or horticultural cooperative. If you miss any one of the three, use Form 8995-A. The tool above applies those two numbers. The thresholds are for tax year 2025 returns filed in 2026; the 2026 figures come with the 2026 instructions.
Why code Z looks like a pile of numbers
The statement may list several trades or businesses, or aggregations, each with its own QBI, W-2 wages and UBIA. The Form 8995 instructions say the W-2 wage and UBIA limits do not apply until your income before the QBI deduction is above the threshold, and that above it you must use Form 8995-A. So if your income is under the threshold, the wage and UBIA lines on the statement do not limit your deduction.
Worked example
Dana is single. Her 2025 taxable income before the QBI deduction is $190,000, and her K-1 has a code Z statement. $190,000 is at or under $197,300 and she is not a cooperative patron, so she uses Form 8995. If her income were $210,000 she would use Form 8995-A and need the W-2 wage and UBIA lines from the statement. A married couple filing jointly with $400,000 would be over $394,600 and also use Form 8995-A. For the deduction itself, see the QBI deduction calculator.
Partnership or S corporation
This page is for Schedule K-1 (Form 1065). An S corporation K-1 (Form 1120-S) reports the same section 199A information in box 17, code V: see the 1120-S box 17 code V page.
More form decoders
Other pages in this set: 1120-S K-1 Box 17 Code V, K-1 Box 14 Code A, K-1 Box 13 Codes, K-1 Box 11 Codes. The 1099-R box 7 lookup and W-2 box 12 lookup cover the same kind of question for those forms.
Sources
- Instructions for Schedule K-1 (Form 1065) (2025): Box 20, Code Z. Section 199A information, and the Form 8995 test for 2025. Read November 2, 2026.
- Instructions for Form 8995 (2025): Thresholds, and the rule that the W-2 wage and UBIA limits apply only above the threshold. Read November 2, 2026.
Page last reviewed by the IRS April 30, 2026. Thresholds are the tax year 2025 figures printed in the instructions.
Frequently asked questions
Is K-1 box 20 code Z a deduction I can take?
No. Code Z is information. The partnership gives you the figures and you use them on Form 8995 or Form 8995-A to compute your own qualified business income deduction.
Which form do I use with code Z, 8995 or 8995-A?
For 2025, use Form 8995 if your taxable income before the QBI deduction is $197,300 or less ($394,600 if married filing jointly) and you are not a patron of a specified agricultural or horticultural cooperative. Otherwise use Form 8995-A.
What are W-2 wages and UBIA on the code Z statement?
They are your share of the partnership’s W-2 wages and the unadjusted basis immediately after acquisition of its qualified property, listed for each qualified trade, business or aggregation. They matter for the wage and property limits, which apply only above the income threshold.
Does every item on my K-1 count as qualified business income?
Not necessarily. The instructions say the amounts may include items that are not includible in your QBI calculation, so you include only qualified items of income, gain, deduction and loss that are included or allowed in determining taxable income.
What do I use if I own an S corporation instead of a partnership?
The S corporation reports the same information on Schedule K-1 (Form 1120-S), box 17, code V. The Form 8995 and 8995-A rules are the same.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. The payer, a CPA or an enrolled agent can confirm what a box or code means for your return. Everything runs in your browser; nothing you enter is sent anywhere.