Thanks so much for your offer, although things seem to be working on the new return that I just created. I appreciate your offer to help out.
With my previous returns (2024 and prior), which weren't done in TurboTax, all schedule E expenses were recorded in total and the loss (triggered largely by depreciation) was transferred to form 8562 where it was disallowed based on my income, due to passive activity loss limitations (my income is over $150k). For some reason on my first attempt at a 2025 return, TurboTax allowed all of the expenses except depreciation on schedule E and then failed to limit the loss based on my income. So, I had two issues, TurboTax was not transferring depreciation to schedule E and it was allowing a passive activity loss that should be disallowed based on my income. That's why I started over with a new return.
With the new 2025 return, I can see that TurboTax is reallocating my rental property expenses as either personal (based on my percentage of personal use of my vacation home rental property) or disallowed based on not letting expenses exceed my income from the property. So, the depreciation is still not showing up on schedule E, although I can see why my expenses are limited to my income from the property so that I don't show a loss. I can now capture the disallowed expenses for my passive activity loss carryforward, so that I can deduct them when we exit the activity (i.e., when we sell the property). I prefer to see the loss calculated on schedule E and transferred to form 8562, which was the case with my 2024 return, although the method used by TurboTax does get me to the right result.
Hopefully that makes sense. Thanks again for your offer to help out.
