Rental Property: Offsetting losse from prior year

[w961hmk]

I own a rental home, which I have rented out for the years 2023 and 2024, and expect to do the same for the foreseeable future.  I am an active participant in selecting renters, hiring the work done, and deciding on capital outlays.  This involves less than 100 hours annually.  In 2023 I sustained a loss of $(7,934) but in 2024 I made a profit of $7,396.  Can I offset the loss from 2023 to the extent of the net income in 2024.  If so, what sections on form 8582 would I complete?  I have to file a paper copy this year.

[AmyC]

It depends on your income. MFS has different rules.

If your AGI is less than $150,000 

• Your active participation means that the loss last year would have been deducted from your income (up to $25,000) 
• Your rental Sch E income goes to Sch 1 line 5. Take a look at last year's return and you will see the rental loss in there.

If your AGI was higher:

• Your passive income  loss was not allowed and is carried forward to go against passive income this year.
• Form 8582, Passive Activity Loss Limitations  Part IV is completed to fill in part 1 line 1c with last year's loss. In part II, you can see the income come into play with the calculations.

The program will do the work for you and you can print, sign, and mail with tracking.

Reference: Instructions for Form 8582, Passive Activity Loss Limitations

[w961hmk]

I figured it out last night.  Looks like I did right.  Thanks for your response.  Now I have another question:  I am the legal guardian of my 20 year old nephew who is a full-time student at a trade school, who lives with me, and I provide much more than 50% of his support.  I have no adopted him, I am merely the legal guardian.  His mother passed away.  I am filing a paper copy, and in the "Dependents" section on the first page of the 1040, should I check off the box that says "Child tax credit" or "Credit for other dependents"?

[Hal_Al]

Q. Should I check off the box that says "Child tax credit" or "Credit for other dependents"?

A. Credit for other dependents

Your nephew meets the rules to be a "Qualifying Child" dependent.  But to get the Child Tax credit, he must also  be under age 17. 

There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit. They are interrelated but the rules are different for each.

The support test is different for each type. The support test, for a QC, is only that the child didn't provide more than half his own support. The support test for a Qualifying Relative is that the taxpayer provided more than half the relative's support.

See full dependent rules at: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...

[w961hmk]

Thanks for your help.  I have one more question, and I should be done.  I received two Form 1095-A's.  There were two months during 2024 that I enrolled in healthcare on the marketplace for myself, my wife and minor son.  I received a 1095-A for that.  I also enrolled in healthcare on the marketplace for my nephew, over whom I am legal guardian, and received a 1095-A for him.  I am filing a filing status, MFJ return, and our AGI = $428,000.  I have determined that we are at more than 400% over the poverty line, so at 401 on line 5 of form 8962.  I have two questions, given our AGI is more than 400% over the poverty line, is it even necessary for me to file form 8962 at all?  It is highly unlikely that I will qualify for the PTC.  Second question:  If I have to file form 8962, must I total the amounts from both 1095-A's that I received on form 8962 or complete a separate form 8962 for each 1095-A?

[Hal_Al]

Since your changing the topic, you may want to make a new post (rather than tag on) to get more eyes on it. 

[DianeW777]

It depends. If you have not received any 'advanced payment of the premium tax credit (APTC), then you are not required to file Form 8962. The following instructions are posted for your convenience and can be found in the instructions (link above). If you were required to file it, you would add the amounts together.

You must file Form 8962 with your income tax return (Form 1040, 1040-SR, or 1040-NR) if any of the following apply to you.

You are taking the PTC.

• APTC was paid for you or another individual in your tax family.
• APTC was paid for an individual you told the Marketplace would be in your tax family and neither you nor anyone else included that individual in a tax family. 

If any of the circumstances above apply to you, you must file an income tax return and attach Form 8962 even if you are not otherwise required to file. You must use Form 1040, 1040-SR, or 1040-NR. 

@w961hmk 

[w961hmk]

Thanks for your response.  My thinking is I probably won't have to file form 8962, but I'll let you guide me after the following information (and I'm sorry I wasn't more clear about this in my previous post).  My wife quit her job during 2024, and so went to 2 months healthcare purchased on the marketplace, hence the 1095-A's we received.  The company for whom I worked paid for the premiums for those two months.  Monthly advance payments of the premium tax credits show up column C on form 1095-A.  I do not intend to file form 8962 to take the PTC credit since none of the payments came out of my pocket unless I absolutely have to.  Am I obligated to do so, given that information?