Net Operating Loss for Sole Proprietor 2024

[antoninaone]

Hello,

I've had a sole proprietor business (massage therapy) for 17 years, and in 2024 I had a business loss for the first time due to health reasons, moving, and having to set up a new practice in a new state.

I am using the desktop version of turbo tax, not the online version.

My question is that I don't know how to have that loss show up on my 2024 return as a net operating loss that carries forward into 2025. 

On my Schedule 1 form 1040, line 3, the business loss is there. However, I don't see anything on my return that says I have a net operating loss that I can carry / am carrying forward. I'm not sure if I didn't click on the right yes/no answer when I started to fill out my return and I need to go back and unclick/change a box to ensure the loss is carried forward. Or, if there is a Tax Form that I need to fill out.

Any help on where on my return, or what Form I need to get and fill out, would be appreciated.

[AmyC]

I am going to assume you have a Sch C as part of your personal return. The schedule C income/ loss adds in with your other income. You may not have a net operating loss for yourself.

If your taxable income is negative on line 15 of the Form 1040,  this creates the NOL. 

Reference: IRS Publication 536 Net Operating Losses (NOLs) 

[antoninaone]

Hi, Thank you for your quick reply.

I do have a Schedule C, and the subtraction of the deduction of line 14 ($14,600) from my AGI on line 11 (approx negative $8K) is negative. Turbo Tax has entered a zero as taxable income for line 15. So, I believe I should have a NOL.

However, that negative number after deducting line 14 from line 11 is not showing up anywhere as a NOL. And, I'm not sure if TT will mark it somewhere on my 2024 return, or automatically remember that number and enter it as a NOL next year when I use TT for my 2025 taxes, or if I need to fill out another form and do it manually myself this year and next year.

[KrisD15 · Accepted solution]

As stated, a negative income amount on Form 1040 indicates a possible business NOL. 

NOL is BASICALLY Form 1040 line line 9 offset by line 8. 

So if line 9 shows 10,000 (income) and line 8 shows -15,000 (loss) the NOL would be 5,000

This also COULD be adjusted for certain "disallowed deductions" as explained in Pub 536, but that's pretty close to it.

Please see worksheet 1 in Pub 536

TO CLAIM THE NOL NEXT YEAR

In TurboTax, under the Business tab

Scroll down to "Less Common Business Situations"

Scroll down to "Net Operating Loss/QBI Carryforward Loss     START

Check to see if anything was generated from the previous year, if not, enter the NOL here. 

Enter the loss as a positive number. 

Enter the full amount of the carryover even if all of it can't be used

If the loss is still not completely used, you'll need to again check this same screen the following year until the loss is depleted. 

When you claim NOL, it is listed on Schedule 1 line 8a