How do I know if I have a NOL to be carried over into 2017?

[dande36]

We sold a rental house that has always been a rental in 2016.  On the line in TT for sales of business property it has a loss of $13,000 listed.  Then later TT is asking if I has a NOL to be carried over into 2017 (I know we don't want to carryback).  Should I enter yes or no there?  I don't know if that $13,000 is a carryover or does that entire amount offset any income for 2016?  Our 2016 income consists of around $17,000 social security , around $3000 for rental of that house in 2016 and a couple of small capital gains on investments. 

I assumed that TT would calculate that and know if there is an amount to be carried forword

 Thanks

[Critter]

The NOL is not part of the program that is done automatically and you may wish to seek professional assistance if you are not understanding the situation ... yours sounds pretty straight forward since you will waive the carryback  and just go forward ....going forward you may wish to capitalize on the loss by selling some investments if you have some gains that you want to capitalize on ... again talking with a professional to optimize your use of the loss is a wise choice. 

If your AGI is negative, after you click "Done with Deductions" at the bottom of the screen "Your 2016 Deductions & Credits," a couple of screens later it will ask you if you have an NOL for 2016. If you select Yes, the next screen will ask you whether or not you want to carry it back. If you elect not to carry it back, it will include the necessary election form in your return. I believe you will still be able to e-file.

You can also get to this topic in the interview by entering "nol elections, current year" in the Find box at the top right. When you type NOL, this will be one of the choices in the drop-down list.

No edition of TurboTax includes Form 1045. You can download the form and its instructions from the following links on the IRS web site. You have to do the calculations and fill out the form yourself. The form includes Schedules A and B. Form 1045 is not part of your tax return. It is filed separately.

Form 1045: http://www.irs.gov/pub/irs-pdf/f1045.pdf

Instructions: http://www.irs.gov/pub/irs-pdf/i1045.pdf

[dande36]

Thanks- Since our social security is not taxable and we basically have little taxable income do we have to carry it forward at all or can we just not claim it in future years?

[Critter]

It must be carried forward and used on every return ... you cannot skip one... until it is used up or stale dated.   It can be a confusing situation to calculate the carryover in the  future years so using a professional may be  a good idea... also talking to a tax planner on how to use up the loss is a good idea.

[dande36]

Perhaps I should take an IRA withdrawal in 2017??  I believe you can use $3000 per year is that correct?

[dande36]

Can you use a tax professional without filing your taxes with them or maybe I should just use one INSTEAD of Turbotax?

[Critter]

The NOL loss is not limited to the $3000 cap loss limitation ... and if you have long term cap gains it is possible that you could net thousands of cap gains to offset the losses or take large IRA distributions.  

It is your choice as to if you want to use a pro now for this return or not ... all I am saying is that you are not going to get tax planning advice from a program.  Many good pros can & will just do a tax planning session with you even if you don't use them for the return.  For 2016 you can just complete the return using TT since you can't do anything for the closed tax year.  But for 2017 you  really need to speak to someone ... maybe just your financial planner or broker to see how you can maximize your situation in the future.  If you have investments with large gains that you didn't want to cash in due to the tax cost then now may be a good time to do so.