How do I determine disallowed passive losses by year and type found in the Schedule E worksheets?

[nourdives]

One page, titled Carryovers to 2024 Smart Worksheet, Continued, section titled Disallowed Passive Losses by year and type, showed no value in 2023 for Operating loss under the regular tax column. However, another page titled QBI (Section 199A) Losses by Year Smart Worksheet (cont.), Passive Loss to carry forwards to 2025, has a value under the Regular Tax column for 2023 Operating Loss. I don't understand the difference.

[AmyC]

 Two very different items:

1.Disallowed passive losses  For example,  a rental house lost money or you sold stocks at a loss. These losses carryforward to be used against passive income in the future.

2. QBI encompasses active income- things where you actively participate, business, k-1, real estate professional and can carryforward losses from prior years.

You state that you have a 2025 carryforward passive loss that shows a 2023 passive loss but your 2023 does not show a passive loss.

Figure out what you did:

• Did you amend? 
• Did you add your QBI carryover in as a passive loss carryover?
• Determine what you added to the program and remove it - unless you amended.

Go back through your return and look for changes you made to carryovers, passive and active.

References:

• Qualified Business Income Deduction
• Topic no. 425, Passive activities – Losses and credits

[Pennyctax]

I still don't understand which numbers to put in the schedule E smart worksheet... very confusing and when run a smart check always give problems:

Under disallowed passive losses by year and type

- operating loss:   Regular tax vs QBI

what is considered as operating loss? Is it disallowed loss?  what should put under the regular tax, and QBI column?

Please help if an example can be provided!

[PatriciaV]

When you run Smart Check, TurboTax will present a section of Schedule E Worksheet Carryovers to 2024 Smart Worksheet, Disallowed Passive Losses by Year and Type. You'll see the carryovers are out of sequence. In some cases, 2022 is on the 2021 line. Or the 2023 number is on the 2022 line. 

To fix this, enter the correct number starting with the most recent year, Then move up the schedule until all years are correct. This may be easier if you can access your 2023 return and print the Schedule E worksheet (all pages).

If instead you see several types of carryovers under Passive Loss Carryovers, scroll down until you find the continuation schedule and can see the amount that should have carried over to 2023, then enter that amount for Line G Regular Tax of the summary schedule.

If you're unable to scroll down in the popup window to see these lines, you will need to transfer your return to TurboTax for Desktop so you can use Forms Mode to fix this carryover. See How do I switch from TurboTax Online to the TurboTax software? Also, contact TurboTax Support and request a free download due to the online program restrictions.

@Pennyctax 

[Tupper2000]

I have the exact same issue as in the screenshot above in this thread. I have the desktop version of TurboTax Premiere so I can navigate and type the disallowed losses into the Sched E smart worksheet. But the big question is…where on my prior years’ returns is the correct number to manually enter in my 2024 return? I’ve used TurbTax for many years and have all the prior years on my PC. Smart check shows errors when checking because those disallowed passive loss fields are blank for years 2019 through 2023. I’ve never had to deal with this in prior years using TT. I’ve had disallowed passive carry forward losses for years so it’s important that I enter them. Thank in advance if someone can assist here.

[PatriciaV]

The screenshot posted in this thread is found on the Schedule E Worksheet for the same property/investment in your 2023 tax return. To access this worksheet, you will need to have TurboTax 2023 installed before you can open your prior year return.

If you saved your entire return (including worksheets) as a PDF, this worksheet should have been included.

Once you have a copy of the 2023 worksheet, look below Line 22, after the QBI section, for Carryovers to 2023 Smart Worksheet. The next section (Carryovers..., Continued) displays the carryovers by year, which is the information you need to resolve the form error on your current year return. (See screenshot below.)

While TurboTax normally transfers carryovers from last year to your current return, it's possible this function wasn't successful for you this year. We don't expect this to be an issue next year.

@Tupper2000 

[Tupper2000]

Thanks Pat, I do save all my returns as a PDF. I have them all back to 2010. There are schedule E worksheets for each rental property in there but I don’t see the carry forward section like in the screenshot. I do have the 2023 DVD so I can reinstall last year’s TT and try that. That’s a good suggestion. I’ll let you know. Seems like a lot of work to get those numbers. I wish TT had parsed those numbers and pulled them forward into the 2024 return. Off to work but I will try your suggestion as soon as I can. Thanks. 

[Tupper2000]

Pat, turns out I have TT Premiere for all years 2019 through 2024 already installed on my PC so I didn’t have to reinstall them. I opened all years to look at the unallowed passive losses on the schedule E worksheets. In the process I learned that there two options when you choose to print the return and worksheets as a PDF. The second option to print every worksheet detail prints that unallowed losses part of the worksheet like shown in the screenshot above in this thread. The first option doesn’t capture that. I’ll be sure to print the more complete version going forward. It looks my unallowed losses were zero the past few years. There’s still a big number for losses shown before 2018. Roughly $125,000. That seems to decrease about $5,000 each year. Thanks for your direction.