Form 4562 Depreciation

Forum|Forum|5 years ago
March 11, 2021
3 replies
41 views

In previous years Turbo Tax automatically fills in a form 4562 for my rental property and also shows a carryover of disallowed deductions to the next year. For 2020 Turbo Tax did not automatically forward the information to form 4562. When I search my forms there isn't a form 4562, and TT asks if I want to create a new one. I have residential rental property and this is the form I have used in the past.

I have a carryover disallowed deduction from 2019 and it appears on a carryover Fed worksheet, but TT does not like the number that TT carried forward from 2019. I keep getting an error when going through the error check at the end. I am at a loss. Not sure what to do with this, is it a "bug"? Or am I missing something here?

Thanks in advance for any response. If my question doesn't make sense, please ask specific questions in return to help me ask the right thing!

TurboTax Home & Biz Windows

JoannaB2

Level 9

If your suspended losses were not automatically applied on your 2020 income tax, it could be that you have business losses in 2020. The suspended losses can't be used towards your regular income. if you're not able to deduct your rental losses,you may carry the total losses forward into future tax years to deduct against future rental profits. These losses can be carried forward indefinitely.

But, if you do have passive income, you may have to manually enter the losses in Turbo Tax:

In the Search box on the top right of your screen, enter passive loss carryover, Schedule E and click on find at the right
In the search result box, click on Jump to passive loss carryover, Schedule E
The program will take you to the Income from Rentals section. Answer Yes
Follow the interview.
The screen Do any of these situations apply to this property?
Put a check mark next to "I have passive real estate loss carried over from a prior year " and click Continue i

Passive losses can't be deducted against ordinary income with 3 exceptions:

Active participation in the property such as approving tenants and expenditures, and other management duties.
Material participation in the property such as participation in the operation of the rental property over 500 hours in a year.
Real Estate Professionals includes listing agents, brokers, builders, contractors, leasing agents, and property managers.

CaddyGrnAuthor

Level 5

Thank you so much for your thoughtful reply! It will take me a bit to digest what you have written and review my return. Once I have a chance to do this, I will let you know if this solved my issue.

FYI: I do screen all new tenants, prepare monthly bills, review the rental agreement, and clean the apartments. But I don't spend 750 hours a year doing this... so I have always figured I didn't qualify for "active participation"... or am I confusing this with something else?