How do I ensure prior year sole proprietorship net losses on Schedule C are carried over to this year? It looks like it was not calculated with QBI.

[spirestarter]

I don't see anywhere where last year's loss was accounted for in calculations for this year. I used TurboTax last year, and everything I read says it should be carried over automatically, but it doesn't seem to be the case. Is there somewhere I can manually enter the loss, instead?

[JamesG1]

When you view your 2021 Federal 1040 tax return, is the Schedule C loss reflected on line 8 as a negative number?  

Is the Schedule C loss reflected on Schedule 1 Additional Income and Adjustments to Income line 3?

Or is the Schedule C reflected in some other way?  Did you report a Net Operating Loss on your 2021 Federal 1040 tax return?

If the loss should be carried over in some way, we need to identify how the loss was characterized on the 2021 Federal 1040 tax return.

Please clarify.

@spirestarter 

[spirestarter]

Thank you, @JamesG1 !

Yes, both on the 1040, line 8, and on Schedule 1, line 3 the same negative number is shown.

I'm not sure what you mean by reporting a NOL -- is there a separate form for this? My overall reported total income (line 9  ) and adjusted gross income (line 11) on the 1040 were both negative numbers.

[GeorgeM777]

If your deductions for the year are more than your income for the year, you may have a net operating loss (NOL). There is no separate form for an NOL.   An NOL year is the year in which an NOL occurs. You can use an NOL by deducting it from your income in another year or years.  While the NOL can be carried forward indefinitely, the NOL net operating is limited to 80 percent of taxable income.

To have an NOL, your loss must generally be caused by deductions from your:

• Trade or business,
• Work as an employee (although not deductible for most taxpayers for 2018 through 2025),
• Casualty and theft losses resulting from a federally declared disaster,
• Moving expenses (although not deductible for most taxpayers for 2018 through 2025), or
• Rental property.

A loss from operating a business is the most common reason for an NOL.  However, calculating an NOL and the amount to use in any given tax year is not necessarily an easy calculation.  Moreover, TurboTax does not compute the NOL calculation. You must use the worksheets in IRS Publication 536 to determine your actual carryover/carryback and your current year NOL.

@spirestarter 

[spirestarter]

Yes, I understand that I have a NOL from the previous year, my question is regarding how to carry it over. TurboTax documentation says this should be automatically carried over, but I don't see it in the calculations for this year's return.

[RobertB4444 · Accepted solution]

Put "Net Operating Loss" into the search bar at the top right and then click the "Jump To" link that appears.  If your NOL has been carried forward it will appear here.  If it hasn't been carried forward then you can enter it here.

@spirestarter 

[spirestarter]

Thanks a lot, @RobertB4444 !