NOL - Net operating Loss ---> Non business income clarification

Forum|Forum|2 years ago
September 20, 2023
1 reply
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I am trying to file for a Net Operating loss in a prior year.

Does anyone know if Taxable State tax refunds are considered "non-business income"?

So far I have interest and dividends for that bucket.

Here are the instructions from IRS Pub 536:

Nonbusiness income (line 7). Enter on line 7 only income that is not related to your trade or business or your employment. For ex-ample, enter your IRA distributions, pension benefits, social security benefits, annuity in-come, dividends, and interest on investments.

Also, include your share of nonbusiness income from partnerships and S corporations.

Do not include on line 7 the income you receive from your trade or business or your employment. This includes salaries and wages, self-employment income, unemployment compensation included in your gross income, and your share of business income from partner-ships and S corporations.

Anonymous_

Level 15

See https://www.irs.gov/publications/p536#en_US_2022_publink10008450

Since almost all itemized deductions are considered nonbusiness deductions, it would stand to reason that a state tax refund would be considered nonbusiness income.

I'm going to page @Mike9241 for input.

Mike9241

Level 15

I'm assuming that you properly took the state income tax payments on schedule A rather than as some sort of business deduction on page one of your 1040, then they would be nonbusiness.

Mike9241