Question Regarding Taxes

[itsdahoward]

Assuming in 2018:

1. I owe $5000 in taxes from my day job.

2. I have a $7500 EV tax credit.

3. I have a $500 loss in my rental property.

4. I actively participate in my rental property.

My question is:

Can I carry over the $500 loss for my rental property to 2019 or do I have to use it to offset my day job taxes in 2018? I understand that there is a $25,000 special allowance for actively participating in rental activities.

In addition, when does the $7500 kick in? Does the EV credit come in after everything is said and done (i.e. after the $500 loss offsets my day job taxes of $5000) or does it kick in before the $500 loss offsets the $5000?

[IsabellaG]

Taxes aren't computed on individual items. Your total income for 2018 is added up, losses are subtracted, then the tax is computed on your taxable income. Then any credits are applied to your tax, withholding is subtracted and the net remaining is either a refund or a balance due. You can't carry forward your rental loss because it will be used in 2018.

The $25,000 special rental allowance means that you can deduct up to $25,000 in actual rental losses if you actively participate in the operations of your rental property.