Needing help with figuring allowable NOL from 2020

[TxCatLady1]

I have business losses from 2019 & 2020. The total for them is shown on my 2020 Qualified Business Income Deduction Simplified Computation form line 16. I'm working on my 2021 and it's asking for the allowable NOL carryover from 2020. Is there a certain percentage I need to use? And for further insight, I'm retired and I'm receiving my pension and Social Security Disability. Thanks!

[Cynthiad66]

If your deductions for the year are more than your income for the year, you may have an NOL.

There are rules that limit what you can deduct when figuring an NOL. In general, the following items are not allowed when figuring an NOL.

Capital losses in excess of capital gains.

The section 1202 exclusion of the gain from the sale or exchange of qualified small business stock.

Nonbusiness deductions in excess of nonbusiness income.

The NOL deduction.

The section 199A deduction for qualified business income.

Worksheet 1. Figuring Your NOL.

Use Worksheet 1 to figure your NOL. The following discussion explains Worksheet 1. See the Instructions for Form 1045. If line 1 is a negative amount, you may have an NOL.

Use this Worksheet for figuring your NOL:  https://www.irs.gov/publications/p536#en_US_2021_publink1000177330

Net Operating Loss for Individuals:  https://www.irs.gov/publications/p536

[Mike9241]

do you even have an NOL from 2020?   under the tax laws, the default is you must carryback a 2020 NOL to 2015.  any used is carried forward to the next year and so forth.  however, if you included in your 2020 return an election to forgo the NOL carryback period then it goes to 2021

to figure out if you actually have an NOL use schedule A from form 1045. it starts on page 3

https://www.irs.gov/pub/irs-pdf/f1045.pdf 

[TxCatLady1]

The 1045 form is asking for amount from Schedule A. I don't have that. 

For 2020 I filed Form 1040. Includes Schedule 1 (Form 1040) and has the negative total on line 9. The negative total is shown again on Schedule C (Form 1040) on lines 29 & 31 and box 32a is checked. On Form 8995 the negative amount is shown again on Line 1 & 2. Line 3 has the amount for Qualified Business Net Loss for 2019 shown as a number in parentheses. Line 16 has the total of those two amounts shown as a number in parentheses. 

[TxCatLady1]

I don't have a NOL for personal. Just for the bookkeeping side business I have. I give the details of what I'm showing on my 2020 & 2019 tax returns in response to the other response I received. I'm working on my 2021 and trying to understand the carry back and carry forward amounts and percentage. It was asking for a percentage. Thanks and sorry if this sounds muddled. 

[ThomasM125]

A net operating loss only applies to your personal tax return form 1040. It occurs if your business loss is greater than your personal income. If you look on your form 1040, you would have a negative adjusted gross income on line 11 if you had a net operating loss. Otherwise, you don't have one.

[TxCatLady1]

I'm using Turbo Tax Home & Business. I was employed full time up until 2018 and have always filed a 1040. When I started my business in 2005 and got my client the next year I still filed a 1040 and included my business profit and expenses. That profit was always less than my full time job but definitely enough that I needed to claim. Now that I still have the business but currently no income from it, are you saying I don't need to include anything about the business? I included it last year. The loss amount does show on line 8 of the 2040 as a negative amount. Included with my 1040 was Schedule 1 showing the negative amount and Schedule C showing the expenses and loss. Please forgive the continued posts, I'm hearing different responses and just trying to piece it altogether. Thanks!

[DianeW777]

An NOL, as well as any carryover or carryback is not calculated by TurboTax.  You must use the worksheets in IRS Publication 536 to determine your actual carryover/carryback and your current year NOL.

• IRS Publication 536 - References to nonbusiness means everything that is not associated with your business.

That being said, a NOL is created with your complete return, all income from all sources.  This is why our awesome Tax Expert @ThomasM125 said for you to look at Line 11, Form 1040.  

Once you have your figures, you can follow the rules for amending your tax returns if applicable.

@TxCatLady1

[TxCatLady1]

OK, so I should stop working on the Business tab and work on Personal? I was just doing things in the order that they came up in. 

[PatriciaV]

Until you close your Schedule C business, you should include any business activity on your tax return. This is true even if you had only expenses and no income.

However, if you had no activity for your business you can skip that section of the program (leave Business and go to Personal).

Since you had an NOL carryover, you may still see Schedule C in your return, even if you had no income or expenses to report. 

[TxCatLady1]

First I want to thank all of you for your patience. So I work my Personal and then do the worksheet that is mentioned previously in this thread? 

[DianeW777 · Accepted solution]

Yes.  You must use the worksheets in IRS Publication 536 - References to nonbusiness means everything that is not associated with your business.

You can also use Schedule A, Form 1045 to calculate your NOL.

• Instructions Form 1045

If you have not already carried the NOL to an earlier year, your NOL deduction for the carryover year is equal to the sum of: 

1. Any unused NOLs from tax years beginning before 2018; plus 

2. The lesser of: 

• a. The NOL from the tax year beginning after 2017, which includes any part of the NOL attributable to an excess business loss; or
• b. 80% of taxable income for the carryover year determined without regard to the NOL deduction or sections 199A or 250. 

If you carried the NOL to an earlier year, your NOL deduction is the carried over NOL minus the NOL amount you used in the earlier year or years. If you carry more than one NOL to the same year, your NOL deduction is the total of these carrybacks and carryovers.

NOL resulting in no taxable income. If your NOL is more than the taxable income of the year you carry it to (figured before deducting the NOL), you will generally have an NOL carryover to the next year.

@TxCatLady1

[hanaopsahl]

How do I calculate 2020 NOL that I can use in 2021?

[Critter-3]

You can calculate your NOL on the Worksheets in Publication 536.

See https://www.irs.gov/publications/p536#en_US_2018_publink1000177330

TurboTax does not support Form 1045, but the form is necessary (for farm losses and insurance companies) for NOLs arising before 2018 to apply for a refund.