We had an NOL in 2023 with a carryforward that will likely take a couple of years to use up. I understand the carryforward deduction is limited to 80% of taxable income each year. We also have social security income and the taxable portion is different depending on income with and without the NOL carry forward. If I calculate taxes without the carryforward deduction, I can easily calculate 80% of taxable income to limit the carryforward deduction, but when I then add the carryforward deduction in, it reduces the social security taxable income, so that the ending taxable income is significantly less than 20% of the amount prior to the carryforward deduction. If I force the taxable income to be 20% of the pre-carryforward deduction amount, then I am using less of the carryforward. What is the correct way to calculate this? Use 80% of the original taxable income as NOL carryforward deduction or adjusting the NOL carryforward deduction down, to compensate for the reduction in taxable Social Security income and ending up with taxable income that is 20% of the original taxable income, but a deduction somewhat less than 80% of the original taxable income? Or something else altogether. Thanks!
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