Business Carryover & Passive Income Loss - my reply hasn't been answered

[kjt8]

Hello,

I received the following answer 2 days ago from Diane and had a follow up question that hasn't been answered. Here is what Diane wrote in response to my question:  

Yes, The contractor work is exactly why the questions popped up.  As a self employed contractor you have income that is automatically considered as qualified business income (QBI). Since 2023 is your first year then you do not have any QBI carryover losses.  Answer no to those questions, but be sure to answer 'Yes' to your business income being QBI.

Here was my reply question:  

I appreciate your reply and that information.  I think I understand.  Just to clarify though:  when turbotax gave me the questions about Passive loss carryover and income business carryover it wasn't a yes or no questions - they are asking me to enter amounts.  Do I just enter zero or move forward?

Lastly, you are saying that if I continue to work from home part-time then next year I should be entering amounts in the passive loss carryover and income business carryover questions - correct?   If so, I hope I understand at that time what to enter.  Ugh, taxes!  They've usually been easy for me but maybe I should have had someone do them for me this year.  

Could someone please answer the above?  I'm trying to finish my taxes.  I'm using Home/Business desktop.  Thank you, again, in advance.  Kim

[ThomasM125]

In answer to your first question about entering carryover amounts, if you don't have any you would leave the entry blank. If the program doesn't allow that for some reason, then you would enter $0. 

As far as carryovers to next year are concerned, if you use TurboTax again they should be entered automatically by the program. I can't see the original question, so I don't know if or why you would have carryover amounts to next year associated with your business. One possibility is that you report a loss on your business this year as that could result in a qualified business income (QBI) loss carryover to next year.

A passive loss carryover would normally be associated with a passive activity such as a home rental. A normal business in which you materially participate would not normally generate a passive loss. If you have a home office associated with your business, you may have some unallowed home office deductions that would generate a carryover deduction.

Also, you can't deduct home office expenses for a salary job, that would only apply to an office you use for self-employment work.

[kjt8]

Hi Thomas, I really appreciate you getting back to me!!  My original question was initiated by turbo tax giving me questions about Passive Income Loss and Business carryover after I entered information from a K-1 I received for my aunt's estate.   I originally thought the questions had to do with the K-1 information but then I was told that wasn't the case.  I was advised that they popped up because I'm currently working as a part-time paralegal contractor at home to supplement my Social Security retirement.  I only work about 7 days out of the month - not an employee.  So, I did deduct for my home office space, my purchase of Microsoft Word for the job as well as having to use wireless internet - but that was it.  

I've done my own taxes for years using Turbo Tax but now with the K-1 and working as a contractor, I'm dealing with stuff that makes me a bit nervous - so, I want to be sure I do it correctly.  I believe Turbo Tax will let me move forward without putting any amounts in the passive income loss and business carryover questions, but I'll enter zero (like you advised) if it doesn't.   

FYI:  the amounts on the K-1 I got from the attorney's office were all in Part III, numbers 11a & 11d.  It seems as though those numbers have benefited me in terms of my taxes this year, although I don't really understand why.

If there is any other information you feel would be helpful to me I would greatly appreciate it.  THANKS!!