Somehow your 2021 Schedule C income got marked as passive activity. You will need to amend your 2021 return to remove the PAL and recognize last year's loss. You can remove the losses from this year's return so you can continue filing your 2022 tax returns and go back and amend your 2021 at your convenience.
To change this in TurboTax Home & Business you can follow these steps:
- Within your tax return, under the Business tab and Business Income and Expenses click I'll choose what I work on
- Click Update for Profit or Loss from Business under the Business Income and Expenses section
- Click Edit for your business
- Scroll down to Special Situations under the Final Details section and click Update
- Click Continue
- On the Let's get your at-risk loss carryovers screen, delete the amounts in both columns and Continue
- Scroll down to Special Situations under the Final Details section and click Update (yes, again!)
- Uncheck I have passive activity losses carrying over from 2021
- Check None of the above and Continue
- Proceed entering/reviewing your return.
@asherbert1
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