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A passive loss carryover is created when you have more expenses than income (a loss) from passive activities in a prior year that could not be used that year. Instead, the passive loss is carried forward to future tax years to offset any passive income. The loss continues to be carried over until you use up the entire amount.
Passive Loss Carryovers can be created by any passive activity. Most come from rental properties (Schedule E). If you used TurboTax to file your tax return last year, any Passive Loss Carryovers would appear on Schedule E Wks - Carryforward to 2016 Smart Worksheet (final page - note this is a TurboTax supplemental schedule and not an IRS form). See screenshot #1 below - click to enlarge
If you had more than one property, or you
didn't use TurboTax last year, Passive Loss Carryover appears on Form 8582 Page 2 Worksheet 5 (screenshot
#2). For AMT, look for the same form with "ALT MIN TAX" under
the form title (screenshot #3).
[revised 3/20/17]
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You cannot edit forms directly in TurboTax Online. Manually entering info in form using TurboTax Desktop may cause an e-file reject (if so, you must file by mail).
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I see Form 8582 p2 and worksheet 1 column c seems to have Prior Year Unallowed losses but they are blank and I cannot edit them. Same for worksheet 5 etc.
Looks like I should return my TurboTax CD for a refund. I have officially become too complicated for TurboTax it would appear.
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The CARES ACT now allows you to deduct a passive loss from taxable income. Has Turbo been updated to correctly calculate that offset.
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Yes.
As long as you have entered the amount of any passive loss carryovers in your input, it will be included in your calculation of taxable income.
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