Can Passive Carryover, apply to Roth Conversion amount next year?

[Hugh-Anthony]

I have Passive Carryover loss that TurboTax has been tracking. Doing a "test return" I discovered I could have had $35,000 more income in 2017 before it would have affected my taxes owed. So, if I had known this before January 1, I would've converted that amount from and IRA to a Roth IRA. Will I be able to carry forward that loss to 2018 and apply it against my income or a Roth Conversion amount? If not, is there any way to capture that loss this year with a Roth conversion and file an amended tax return?

[TaxGuyBill]

If you are allowed to use the Passive Loss Carryover on your 2017 tax return, it must be used.

Is TurboTax showing the loss being allowed for 2017?

Does the loss create negative total income (is Line 41 of your Form 1040 negative)?

If you do a Roth conversion now, that would go on your 2018 tax return, not your 2017 tax return.

[Hugh-Anthony]

Thanks for responding. Yes, TT is showing the loss for 2017, and yes, line 41 is negative. I sold a rental condo that over the past few years lost money, but increased in value, so its losses eliminated my capital gains tax obligation. But the losses were even greater than the gains. I didn't know about that tax law (applicable to carryover losses) and was happy to not have a tax obligation on the capital gain. As an experiment, on a copy of my tax file, I increased the amount of IRA to Roth IRA converted and watched TT recalculate taxes owed/refund warranted. That experiment showed I could have converted about 30k more with no tax consequences. I am trying to figure out a way to capture the benefit of that situation.

[TaxGuyBill · Accepted solution]

Sorry, it is too late to do that now.  As you said, that would have needed to be done by December 31st.

There really isn't anything you can do now.

[Hugh-Anthony]

I was afraid of that. Thanks for your insight.