How do I carry over business expenses from a previous year. My business should carry over expenses if possible to match the personal deduction threshold

[SusanY1]

Business expenses for employees are no longer deductible on the federal tax return. Therefore,  unreimbursed expenses for employees for have no effect on your personal deductions.

There are exceptions for Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses.  However, these types of expenses cannot be carried over. If you have these types of expenses, you will enter only the ones incurred in 2019.

If you have business expenses from self-employment income, you will enter the carryovers in the section for Business Income and Expenses.  To do this:

1. Login to TurboTax.com.
2. Click on Tax Home on the left side of the screen.
3. If prompted, click on Continue where I left off or Take me to my return.
4. Click on Wages & Income.
5. Scroll to Self-employment income and expenses and click Start (or Revisit.)
6. During the interview process, TurboTax will ask about special situations.
7. Check the box "I have at-risk losses to carry over" to enter the expenses.

[badgertheferret]

@SusanY1 

thank you for the answer. I have gone through my 2018 tax return and am trying to amend it to carry over expenses to 2019. I have not found the question about investment being at risk on the mobile site. How do I get to that question about carrying over and investment being at risk?

[AmeliesUncle]

You are NOT allowed to selectively choose to take deductions or not.  If they are allowable, they MUST be taken.  Sorry.

[badgertheferret]

Then how do businesses carry over expenses from one year to the next?

[AmyC]

The only business expense that carries over year after year is depreciation. Otherwise, you must input each year what expenses you had. Nobody has the exact same expenses every year. The program can not carry over anything but capital expenses that are being depreciated each year.

If you are using the Self-Employed version, you qualify for one free year of Quickbooks. you can track expenses through QuickBooks and then import them into your tax return.

Once your return is paid, click the Quickbooks link and you can log in with your same user name and password as Turbo Tax.

[badgertheferret]

@AmyC 

So as an example, if I bought a house to rehab  in 2017 how do I offset the expenses of its rehab when I sell the house in 2019? If I'm not able to carry them forward, I am not able to expense them because they are over the income of the business for those years until it's sold. Then in 2019, the entire price of the house being sold is considered capital gains, right?

[AmyC]

You purchased property in 2017 and made capital improvements to sell in 2019. When you sell the house, you receive a 1099S listing the sale price. On your taxes, you will enter the basis which is the cost originally plus purchase expenses plus improvements plus sales expenses.

This information goes on your schedule D and would be a capital gain.

[badgertheferret]

@SusanY1 

It is self-employment income and I'm looking into amending 2018 taxes by carrying over expenses from 2018 into 2019. I have not been able to find the question if my expenses are at risk. I see it on the paper form but I cannot find it on the TurboTax program. Can you explain in more detail what is allowed to be carried over from year to year in business expenses, please?

[ThomasM125]

If you have a loss on a business, you would deduct that in the current year to the extent that you were invested (at risk) in the business. If your loss was more than you had  invested in the business, you could carry the balance over to future years when you were at risk or disposed of the business.

Is this what you are dealing with?

[AmeliesUncle]

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@badgertheferret wrote:

@SusanY1 

It is self-employment income

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Are you in the business of rehabbing and selling Real Estate?  If so, pretty much all of the expenses are added to the cost of the house, and are part of your "Inventory" (Cost of Goods Sold).   If that is the case, you don't actually get the deduction until the house is sold.  So there is no "loss", but the expenses are used when the house is sold.

If that doesn't seem like your situation, you need to explain in detail about exactly what you do, how often you do it, and how you have reported things in prior years.  You may also consider a tax professional.

[Lambchop]

I am having problems with this as well. I have a carryover and it populated at the end of the Home Office Section from Form 8829. I have a net profit this year but it did not make a difference - did not give me the option to use my carryover. I tried to get back to the interview to say ‘yes’ to that question and I could not get into those questions anymore.  Where do I go from here? Thank you!

[MarilynG1]

@Lambchop Your Business Expenses are deducted in the year you claimed them, even if this gives you negative business income.

A Home Office carryover is different.  It will be continued to be carried over until you are able to claim Home Office Expenses (which it sounds like you can this year).

It sounds like the carryover populated Form 8829, but if the same amount is shown on Lines 43 for 2021 carryover, it is not being applied this year. 

If you moved in 2020 and indicated this was the first year using the new office, the carryover wouldn't be applied. 

Make sure you indicated the % of Income 'earned from your home office'.  If self-employed, this would be 100% (unless you have another office). 

Since we can't see your return in this forum, you could try deleting your Home Office entries and re-enter them to see if this resolves your issue.

You can also request an Offline Review.

Click this link for more info on Home Office Expenses you may find helpful. 

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