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Form 8903: Domestic Production Activities Deduction
IRS Form 8903 is used to figure your Domestic Production Activities Deduction (DPAD) for income attributable to domestic production activities. The deduction generally starts at 9% of the smaller of your QPAI or AGI.
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IRS Form 8903 - Domestic Production Activities Deduction
IRS Form 8903 is used to figure your Domestic Production Activities Deduction (DPAD) for income attributable to domestic production activities. The deduction generally starts at 9% of the smaller of your QPAI or AGI.
Risk Radar
Scan points- 1If you use the small business simplified overall method, ensure you skip lines 2 and 3 correctly before proceeding to line 4.
- 2Failing to complete lines 1 through 10, column (a) when oil-related production exists.
- 3Entering amounts for all activities on lines 1 through 10, column (b).
- 4Skipping line 2 and going to line 4 if using the simplified overall method.
- 5Skipping line 3 and going to line 4 if using the simplified overall method.
Plain English
This form helps taxpayers calculate a special tax break called the Domestic Production Activities Deduction (DPAD). This deduction reduces taxable income based on how much money is earned from activities done domestically. If you have oil-related production, this form also requires an extra 3% reduction to your DPAD.
Submission Date
- Filing date: 2020-01-07 22:12:31
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when calculating your Domestic Production Activities Deduction (DPAD) for income attributable to domestic production activities.
- Do not use Form 8903 to claim DPAD for tax years beginning in 2018 or later unless the tax year began before January 1, 2018.
- Check Form 8903 when a specified agricultural or horticultural cooperative uses it to calculate the section 199A(g) deduction.
Form selector
Use this form or another form?
You are an S corporation shareholder
The S corporation provides information needed for your allowable DPAD.
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You are a partner in a partnership
The partnership includes information provided when figuring the allowable DPAD.
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You are a patron of an agricultural/horticultural cooperative
You may be allocated a share of the cooperative's DPAD to include on this form.
✓ Check before you continue
Deadline or filing window
The DPAD is figured based on income attributable to domestic production activities prior to the tax year. The instructions do not state a specific filing deadline date for Form 8903 itself. A taxpayer must calculate the deduction using the applicable items of both spouses if married and filing jointly.
Checklist
What you need before filling it out
General DPAD Rate
Smaller of QPAI or AGI (or taxable income) without DPAD · Instructions p.1
Oil-related DPAD Reduction
3% of the least of Oil-related QPAI, QPAI, or AGI without DPAD · Instructions p.1
DPAD Limit (General)
Generally cannot be more than 50% of Form W-2 wages paid to employees allocable to domestic production gross receipts · Instructions p.1
Filer Requirement (Non-EAG/Cooperative Share)
Must enter a positive amount for QPAI, AGI, and Form W-2 wages on Form 8903 · Instructions p.1
DPAD Activity Types
Manufacturing, growing, mining, storage/processing (in US) · Instructions p.5
Form 8903 Line 2/3
Allocable cost of goods sold and deductions/losses allocable to DPGR · Form p.1
Before you submit
- 1Ensure all Name(s) are correctly entered on Form 8903.
- 2Confirm whether oil-related production activities exist; if so, complete column (a).
- 3Enter amounts for all activities in column (b), including any oil-related activities.
- 4If using the small business simplified overall method, skip entering amounts on lines 2 and 3.
- 5Verify that your DPAD is not exceeding 50% of the allocable Form W-2 wages paid to employees.
- 6Confirm that all three required inputs (QPAI, AGI, Wages) are positive if you are not an EAG or cooperative patron.
- 7Attach Form 8903 to your tax return.
How to file this form
- 1Enter the Name(s) on Form 8903 as shown on your tax return.
- 2Complete column (a) if you have oil-related production activities; otherwise, proceed to column (b).
- 3Enter Domestic Production Gross Receipts (DPGR) on line 1 of column (b).
- 4Enter allocable cost of goods sold on line 2 (skip lines 2 & 3 if using the small business simplified overall method).
- 5Enter other deductions and losses allocable to DPGR on line 3.
- 6Attach Form 8903 to your main tax return.
Known limitations
- 1For specified agricultural or horticultural cooperatives (specified cooperatives), a deduction under section 199A(g) is available for income attributable to domestic production activities when using Form 8903.
- 2If the taxpayer has oil-related QPAI, the DPAD must be reduced by 3% of the least of three amounts: Oil-related QPAI, QPAI, or Adjusted gross income (individual/estate/trust) figured without DPAD.
- 3The general DPAD cannot exceed 50% of the Form W-2 wages paid to employees properly allocable to domestic production gross receipts.
- 4For a taxpayer who uses the small business simplified overall method, lines 2 and 3 on Form 8903 are skipped.
Field map
Compact field-by-field guide
Entity Info
1 items
Name and taxpayer ID of the entity claiming the credit.
Credit Info
1 items
Type of credit or incentive being claimed.
Calculation
2 items
The base amount used to calculate the credit.
Calculated credit amount after applying formulas and limitations.
Certification
1 items
Detailed breakdown supporting the credit calculation.
Signatures
1 items
Sign and date the form.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is December 2018, and taxpayers should continue using this version for tax years beginning after 2017 until a new revision is issued. The instructions direct users to IRS.gov/Form8903 for the latest information about developments related to Form 8903.
What changed or needs a fresh check
- Edition date — confirm the revision reads December 2018.
- IRS Website Link — confirm instructions are available at IRS.gov/Form8903.
- OMB Number — confirm it is 1545-1984.
- Attachment Sequence — confirm this form has sequence number 143.
Quick Facts
Downloads
After you file
- 1Keep a copy of the completed IRS Form 8903 for records.
- 2Attach Form 8903 to your tax return when filing.
- 3Use the December 2018 version of Form 8903 for tax years beginning after 2017 until a new revision is issued.
- 4If using this form, taxpayers should refer to IRS.gov/Form8903 for the latest information regarding developments.
Sources
- SRCInstructions p.1 — The purpose of Form 8903 is to figure your domestic production activities deduction (DPAD).
- SRCInstructions p.1 — The general DPAD is 9% of the smaller of qualified production activities income (QPAI) or adjusted gross income for an individual, estate, or trust (taxable income for all other taxpayers).
- SRCInstructions p.1 — Oil-related QPAI must reduce the DPAD by 3% of the least of Oil-related QPAI, QPAI, or Adjusted gross income.
- SRCInstructions p.1 — The general DPAD cannot be more than 50% of Form W-2 wages paid to employees properly allocable to domestic production gross receipts.
- SRCInstructions p.1 — Individuals, corporations, cooperatives, estates, and trusts use Form 8903 to figure their allowable DPAD before 2018.
- SRCForm p.1 — Column (a) on Form 8903 is for oil-related production activities; column (b) is for all activities.
- SRCInstructions p.1 — For specified cooperatives, a deduction under section 199A(g) is available for tax years beginning after 2017 using Form 8903.
- SRCInstructions p.2 — Cooperatives must calculate the DPAD separately to determine patronage and nonpatronage income or losses for Schedule G, Form 1120-C.
Common confusion points
Who must file Form 8903?
Individuals, corporations, cooperatives, estates, and trusts use it to figure their allowable DPAD from certain trade or business activities.
What is QPAI if you are a partnership/S corp?
Shareholders of S corporations and partners include information provided by the S corporation or partnership when figuring their allowable DPAD.
How do married couples file Form 8903?
Married individuals filing jointly figure the deduction on one Form 8903 using the applicable items of both spouses.
What is DPGR?
Domestic production gross receipts are determined by using any reasonable method satisfactory to the Secretary, item-by-item.
When do you use the Oil-related column (a)?
Do not complete column (a) unless you have oil-related production activities; enter amounts for all activities in column (b).
Does this form cover cooperatives?
Yes, specified agricultural or horticultural cooperatives may use Form 8903 to calculate the section 199A(g) deduction.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Use the Instructions for Form 8903 dated December 2018 when computing DPAD for tax years prior to repeal.
Questions about IRS Form 8903
What is IRS Form 8903 used for?
This form helps taxpayers calculate a special tax break called the Domestic Production Activities Deduction (DPAD). This deduction reduces taxable income based on how much money is earned from activities done domestically. If you have oil-related production, this form also requires an extra 3% reduction to your DPAD.
Who must file IRS Form 8903?
Individuals, corporations, cooperatives, estates, and trusts use Form 8903 to figure their allowable Domestic Production Activities Deduction (DPAD). Shareholders of S corporations and partners include information provided by the entity when figuring their allowable DPAD.
What information does IRS Form 8903 require?
The form collects data on your domestic production activities income. Specifically, you report your Domestic Production Gross Receipts (DPGR) on line 1, along with costs like Allocable Cost of Goods Sold on line 2 and other deductions or losses on line 3.
When is IRS Form 8903 due?
The source does not specify a filing deadline date for Form 8903. However, the deduction is figured based on income attributable to domestic production activities prior to the current tax year.
Where do I file IRS Form 8903?
The instructions do not specify a particular service center address or mailing location. The form must be filed with the IRS using the general filing rules.
How do I complete IRS Form 8903?
First, complete lines 1 through 10, column (b), with amounts for all activities. If you have oil-related production activities, also complete lines 1 through 10, column (a). Line 2 reports your DPGR; if using the small business simplified overall method, skip line 2 and proceed to line 4.
What happens if IRS Form 8903 is filed incorrectly?
While the source does not detail penalties for incorrect completion, failing to properly figure your DPAD means you may pay too much tax because the deduction is calculated incorrectly.
Who must file Form 8903?
Individuals, corporations, cooperatives, estates, and trusts use it to figure their allowable DPAD from certain trade or business activities.
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