Question Regarding Form 8582 Passive Activity Loss

[ts62860]

Hi,

I have been using an accounting firm for tax preparation over the past four years due to my limited confidence in handling rental property taxes. However, this year, I have decided to use TurboTax (TT) instead, as the cost of tax preparation has increased significantly.

My question relates to Form 8582 – Passive Activity Loss. I have a loss of $9,584 (reported in Part IV of Form 8582 in last year 2023 tax), but I do not have any worksheets related to Form 8582 from my previous accountant.

In TurboTax, I need to determine the loss carryover amount for my rental properties ($9,581), but I am unsure which category it falls under:

• Schedule E – Regular Tax Carryovers
• Schedule E – Alternative Minimum Tax (AMT) Carryovers
• Schedule E – Qualified Business Income (QBI) Carryover

Could you please clarify which category this should be reported under?

Thank you for your help!

[PatriciaV]

1) Passive Loss Carryovers (Regular) are reported on Page 2 of Form 8582 Part VII column (c).

The loss in Part IV column (c) does not include any carryover losses from last year that may increase the carryforward to your current tax return.

2) AMT Loss Carryovers appear on a companion report labelled "Alt Min Tax," again on Page 2 Part VII column (c). This worksheet is not filed with the IRS.

3) QBI Carryovers are reported on Form 8995 Line 16.

Most tax software creates a summary report of carryover losses as well. If you were not given copies of all these reports and worksheets, you should contact the tax preparer you used last year and request them. These documents are part of your complete tax return, even if they are not filed with the IRS.

[ts62860]

Patricia - thank you so much! Below is what the previous tax preparer sent me. So for 20245, I will tick the check box for (1) and (2) as in  TurboTax. I do not have Form 8995.

Is this correct?
1) Passive Loss Carryovers (Regular) 

2) AMT Loss Carryovers 

3) QBI Carryovers are reported on Form 8995 Line 16.

[MarilynG1]

Yes, that would be correct.  If your prior year return contained a Federal Carryover Worksheet, you can also see QBI Carryovers on Line 29.

Here's more info on Qualified Business Income.

@ts62860 

[ts62860]

Thank you! I feel much confident now filing my tax DIY.

Meaning, my previous tax preparer has declared my rental as INVESTMENT, nit as BUSINESS, thus I do not have QBI. Is that the correct understanding?

Unfortunately, I do not have prior year Federal Carryover Worksheet.

[PatriciaV]

Yes, that would be the implication of not having Form 8995 or any QBI carryovers on your return - the activity was reported as either as an investment or "not a trade or business."

@ts62860