Do i need Form 3801? I filed form w-2 and 1099, why i need that form (3801)

[Shino]

Form 3801

[MayaD · Accepted solution]

Form FTB 3801 is filed by individuals, estates, trusts, and S corporations that have losses (including prior year un-allowed losses) from passive activities. Passive activities include trade or business activities in which you don't materially participate. 

The form won't be available until 2/10/2022 and can't be e-filed. California Individual Form Availability

[greenjeanie]

Thank you Maya... but I am perplexed.  

Can I E File everything else and US Mail this form?

This form IS now available on the CA FTB website... I just downloaded it.

How can I E File ?   I have everything else ready to go.

Thanks ...  Jeanie   ( Turbo Tax Home & Business // former Turbo Tax Tech Support Specialist ) 

[greenjeanie]

Greetings Maya!  Thank you for this answer.  the Form 3801 is definitely holding me up from e-filing.

Can I e-file after it comes out on Feb 10th -- or not?   "can't be e-filed" seems like it might be the whole filing.

Are you trying to say that a person cannot e-file UNTIL the form comes out on Feb 10... ?   or that it will not work at all if form 3801 is involved.

Please clarify.  I called support 2 times but did not get a clear answer.

Thanks!

[ErnieS0]

I'm not sure I understand your question @greenjeanie. TurboTax will not let you e-file unless all the forms are final.

The e-filing process will not simply hold back the pending forms because each form may impact the numbers on other forms.

That said, since Form 3801 is a state form, you can e-file your federal return (assuming all those forms are final) and e-file California after Form 3801 is final.

[kmbowland23]

Updated because I can't see how to delete the original: Thanks for the explanation. I understand that after the forms are delayed by federal and/or state agencies, it takes time to have it available within the Turbo Tax program - tax returns are complicated and you can't just stick a new form in without a lot of editing and testing of the software. Thanks for your work. 

Original: When I check the FTB site for forms, the 2021 form 3801 is available now. It says nothing about waiting another month.

[RobertB4444]

The IRS started this tax season pretty far behind.  That kind of delay flows down to the states.  So the IRS finalizes their forms and then the states finalize their forms.  And then the TurboTax programmers get the forms and have to integrate them into the TurboTax program.  Then there is testing to make sure that the newly added forms work with the program properly.  Then they are rolled out to the public.  

All that is to say that the form 3801 is available on the FTB site but needs until February 10th to be integrated into the TurboTax program.

[just4mar]

Hello,

I also filed a W2 and 1099 and purchased a home in 2021. Why do I need form 3801 if I have no rental property losses or any loss? I don't understand why I would need this form. Is there any screen in TT I can review in case I checked a box wrong?

--Margie

[KrisD15]

To clarify-

Did you enter anything concerning the new house? 

What type of 1099 did you enter and what is it for? 

Do you have any loss carry-over from a previous tax year? 

You can look under Wages and Income (or Personal Income) 

Scroll down to "Investment Income" and look at "Capital Loss Carryover"

[just4mar]

Hi Kris,

Did you enter anything concerning the new house?  yes, I bought the house in 2021, total loan amt, # years, new windows. I rented previously.

What type of 1099 did you enter and what is it for? It's a 1099-NEC - I worked as a contractor for 4 months for a company and that's the form they gave me to report income.

Do you have any loss carry-over from a previous tax year? I have no losses

I just looked at everything in that area, none of it applies.

[ThomasM125]

@just4mar Nothing you mentioned there would require a form 3801, which is for passive activities. It could also be from a K-1 entry you made for ownership in a partnership or S corporation. You can try deleting the form. If it is tied to another form, you won't be able to delete it though.

A simple way to delete forms in TurboTax online is to use the Tax Tools menu option, which is on your left menu bar when you are working in your program. Then, choose Tools and then Delete a form.

If you are working in the download TurboTax program, use the Forms Mode on your menu bar to bring up the form you want to delete, then choose the Delete Form option at the bottom of the form.

[just4mar]

Hi Thomas,

Thank you, now I see the issue.

I worked as a contractor Project Mgr for my last company. I was a full time employee, then they made me a contractor for 4 months to find another job. They sent me a 1099-NEC and when I upload the form, it shows a Schedule C form saying I need to input a Principle Business Code. Enter a valid 6 digit business activity code. This is why it's thinking I need Form 3801, which I don't. What do I put in for a business code or how do I update this to have form 3801 go away?

[just4mar]

Hi Thomas,

Looking further, the Form 3801 was showing due to a Schedule C form I had and didn't need. I deleted the Schedule C and now that made the Form 3801 go away.

THANK YOU so much for your help!

Margie

[Ctaxquestions]

@ThomasM125 

I have a similar situation.  I received a w-2 from my employer and I did a small amount of contract work and received a 1099-NEC.  I don't understand why it is saying I need a 3801 form??!?  I don't own a business... Just did a side job.  Do I just delete the schedule C form (like I believe user @Marge2 did?? Please help, so I can file my state taxes!

[ThomasM125]

@Ctaxquestions Form 3801 is used to report income and losses on passive activities that can come about form ownership of a business that you are not actively involved with. The income you reported on form 1099-NEC is considered business income. It is possible you didn't designate it as being an "active" interest of yours.

To check on this, go back into your business entries and edit your business profile. You will come to a page that says Let's confirm your business info and under the section that says Special Situations, make sure you checked the "Yes" response next to "Actively Participates."