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What is passive loss carryover

Forum|Forum|7 years ago
June 1, 2019
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Best answer by PatriciaV

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]

D

dixonmillerllc

Level 2

If we have losses from a prior year that do not include rentals, is the loss considered a passive loss carryover?

M

maloofalyssa

Level 2

amt gain or loss

D

dmintah

Level 2

8962

PatriciaVAnswer

Level 15

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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T

tiomilty

Level 2

There are two columns in the Smart Worksheet (Regular and AMT). The amount of carryover is different for each column. How do you decide which column to use for the carryover amounts? Also, there are several lines in this worksheet. There is no column sum, so do you just add all the lines yourself when calculating the carryover amount?

M

mashraf7

Level 2

Where is the screenshot #1 and #3

N

nhmkmhyh

Level 2

Where are the screenshots?

B

BillM223

Level 15

@nhmkmhyh

In May-June of 2019, the old AnswerXchange system was moved to a new platform (this one). In that migration, the screenshots were not carried over, so there are no screenshots.

In the future, screenshots will appear inline in the answer, not attached below as before.

What screenshot did you need?

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S

SteveC4

Level 2

The CARES ACT now allows you to deduct a passive loss from taxable income. Has Turbo been updated to correctly calculate that offset.

J

JotikaT2

Employee Tax Expert

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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S

SteveC4

Level 2

Sorry for the misunderstanding, but I'm talking about a passive loss in 2019 that can offset taxable income earned in 2019. This is not a carryover situation. Has Turbo been updated to calculate this based on the CARES Act?

M

mayxie

Level 2

Should the carryover loss also show on schedule c?

R

RobertB4444

Level 15

@mayxie No. Schedule C is only for active income. Passive losses would only offset that income by being allowed deductions on your 1040.

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M

mayxie

Level 2

thank you. I wonder if the rental property carryover losses are at risk Carryover? It is my first time using TurboTax. It is pretty much a plain vanilla kind of investment property. I collect rent and pay mortgage and the tax and repair. (I realized the results are quite different using at risk or not at risk. ). Thank you!