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Does turbo tax automatically carry forward rent income loss from this year to the next? I will be earning higher rent next year and hope to use that to deduct excess loss

Forum|Forum|6 years ago
June 4, 2019
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If turbotax doesn't automatically do this, how do I go about the process?

TurboTax Premier Online

Best answer by DawnC0

Yes, if you used TurboTax this year and have a suspended loss, you will be able to use the suspended loss next year when you have passive income. You don't need to take any additional steps now.

A passive loss carryover is created when you have more expenses than income (a loss) from passive activities in a prior year that could not be used that year. Instead, the passive loss is carried forward to future tax years to offset any passive income. The loss continues to be carried over until you use up the entire amount.

Passive Loss Carryovers can be created by any passive activity. Most come from rental properties (Schedule E). If you used TurboTax to file your tax return last year, any Passive Loss Carryovers would appear on Schedule E Wks - Carryforward to 2017 Smart Worksheet (final page - note this is a TurboTax supplemental schedule and not an IRS form). If you had more than one property, or you didn't use TurboTax last year, Passive Loss Carryover appears on Form 8582.

When you prepare next year's return with TurboTax and show passive income, TurboTax will apply any suspended losses available from this year's tax return.

DawnC0Answer

Yes, if you used TurboTax this year and have a suspended loss, you will be able to use the suspended loss next year when you have passive income. You don't need to take any additional steps now.

A passive loss carryover is created when you have more expenses than income (a loss) from passive activities in a prior year that could not be used that year. Instead, the passive loss is carried forward to future tax years to offset any passive income. The loss continues to be carried over until you use up the entire amount.

Passive Loss Carryovers can be created by any passive activity. Most come from rental properties (Schedule E). If you used TurboTax to file your tax return last year, any Passive Loss Carryovers would appear on Schedule E Wks - Carryforward to 2017 Smart Worksheet (final page - note this is a TurboTax supplemental schedule and not an IRS form). If you had more than one property, or you didn't use TurboTax last year, Passive Loss Carryover appears on Form 8582.

When you prepare next year's return with TurboTax and show passive income, TurboTax will apply any suspended losses available from this year's tax return.

C

cherry532

what if I have suspended loss from 3 years ago? how can it be used to offset gain in the future tax return?

C

carseat1

Gather your returns where you show unallowed losses on Form 8582. Use the unallowed losses from each year and add them together to enter them on your 2020 tax return. If you take the first year of unallowed losses and then add each year you should not be doubling any figures. Just be sure to check that as you combine the totals. Once you have the correct amount you can enter that carryover loss amount using the steps below.

Use the Search (upper right) > Type rentals > Select Edit beside your Rental Activity > Under Less Common Business Situations > Edit Carryovers, limitations, at risk info, etc. > Continue to enter your passive loss carryover.

Phaseout Rule: The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that’s more than $100,000 ($50,000 if you’re married filing separately). If your modified adjusted gross income is $150,000 or more ($75,000 or more if you’re married filing separately), you generally can’t use the special allowance. This is because the special allowance is reduced to $0 since the modified adjusted gross income is over the $100,000 amount.

The full remainder of PAL carryovers will be allowed in the year of sale or disposition.

It is always helpful to have an expert display the TurboTax steps. Thank you for that.

However, I just sold my rental in California, what happened to the losses for prior years? I've used TurboTax software since 2002 and the accumulated suspended losses used to display in CA form 3801 until the 2020 tax year. In 2020, the CA form 3801 the line item is gone: ("Part I 2020 Passive Activity Loss, 1c Prior year unallowed losses from Worksheet 1, column (c).") Where does Worksheet 1 get the information? Why did the losses not carryforward? I've used TurboTax Premier.

Thank you.