My loss on rental income is not reported in PA income tax - PA schedule E

[vnkt]

In PA schedule E form. total Rent on line 1 is $9350. Total Expenses on line 18 is $15296. But line 20 reported as $0.  No rental income loss has been reported in PA Schedule E. I used online turbo tax - Self Employed product.

[2014single]

I had a similar situation.  According to Turbo Tax, PA does not allow a rental loss claim when you use schedule E; only for schedule C which is used by real estate agents.  On my return the loss was listed on line 6 but not deducted.

[dpfromva]

Pennsylvania does not provide for carry over of unused losses as noted previously. I am a non resident who only has rental loss in PA; therefore I manually file with the loss calculated. Tax laws can change, and I prefer to have the loss recorded by the state. 

[catance]

However, if you read through the Schedule E instructions it says nothing of the sort. You're supposed to add all the profits and losses together to get a total profit or loss. There's nothing about disallowing losses. In another post somebody commented that TurboTax's result contradicts the state's own online software for Schedule E. I am suspecting this is a significant screw-up by Intuit, unless somebody can point to specifics in the tax code saying otherwise.

[DianeW777]

Pennsylvania (PA) tax law specifically states the following:

• A loss in one category of income cannot offset the gain in another category of income.  
  • Example:  Rental loss cannot offset wages, interest, dividends, self employment, or any other type of income. Likewise a business loss (Schedule C) cannot offset rental income, wages, interest, dividends or any other income class.  Losses can be used to offset income only in the same class of income,
• Likewise, there are no carryover losses allowed on the PA return.
  • PA Income Tax Rules for Offsetting Losses Against Gains
• @catance 

[catance]

None of this is relevant. The problem is that TurboTax is zeroing out losses on PA Schedule E so that they don't offset gains in the same year from other properties. As you note: "Losses can be used to offset income only in the same class of income". TurboTax is making this impossible.

[catance]

Let me provide some numbers to illustrate, since I can't post images:

Line 1 Rent received: 8,000  15,000  11,000

Line 18 Total expenses: 7,000  10,000  18,000

Line 19 Income: 1,000  5,000  (blank)

Line 20 Loss:  (blank)  (blank) 0

That last number should be 7,000, not zero, and the loss box should be checked. There's nothing in the official form instructions indicating something different should happen.

Line 22 should indicate a loss of 1,000, not a gain of 6,000.

[DaveF1006]

It appears that your $1,000 is disallowed this year and may be able to be claimed next year. There may be two reasons why it was disallowed for this year.

1. Go to the property profile section of your rental property and see if you indicated you were an active participant of the property.  If that Box is unchecked, you may need to check it but before you do, read my second reason.
2. If you have an adjusted gross income amount above $150,000, you are not allowed a passive loss against income and the loss will be carried forward next year.

Check your Schedule E worksheet for your property. Scroll down to Carryforward to 2023 Smart Worksheet and see if you have a passive loss carryover for $1,000.

@catance 

[catance]

@DaveF1006 

I started a new thread laying out the whole problem as I see it. This is only about applying rental losses in a particular year against rental gains in the same year. This should all take place on the PA schedule E, but TurboTax is zeroing out any losses so that there are only gains. This seems so obvious and has been going on for so many years that I have to wonder if I'm missing something. Please examine my thread and let me know your thoughts. Thanks!

[catance]

For completeness I'll repeat the mea culpa here: This is not a Turbotax bug. Instead it stems from mistakenly identifying an in-Pennsylvania property as not-for-profit, which then disallows losses.