How do I recognize Net Operating Losses from 2018 and 2019 on my 2020 TurboTax 1040 filing.

[WmB]

I note that my TurboTax software carried forward Net Operating Losses from 2018 and 2019 on forms 8995 for those two years.  Following the Step-by-step program guide, the cumulative NOLs for 2018 and 2019 can be applied to the 2020 tax return.  However, I can find no provision how to gross up the 2018 and 2019 NOL's, add an NOL generated in 2020 and carry the total forward for use in future years. Help please.

[Anonymous_]

Read the section of the IRS publication at the link below.

https://www.irs.gov/publications/p536#en_US_2020_publink1000177402

Obviously, use the worksheet to figure your NOL for each tax year.

[AmeliesUncle]

Form 8995 does not report or carry over a NOL.  That form may report a QBI loss, but that is different than a NOL.

So first, do you actually have a NOL?  A NOL is not just a business loss; it means the enter net tax return ends up with negative income.  So with that in mind, do you actually have a NOL?

Next, if you do have a NOL, did you "Waive the Carryback" for the 2018 and 2019 NOL?  Due to retroactive tax laws, you would not have done it in 2018 and might not have for 2019.  Without the election to "Waive the Carryback", any NOL would be carried BACK 5 years.

Lastly, as Tagteam indicated, TurboTax does not calculate NOLs (it is NOT necessarily just the amount of your loss).  You need to MANUALLY calculate them and MANUALLY enter them into the program.

[WmB]

Thank you for the link.  That addressed nicely how to apply an NOL for an ensuing year.

[Anonymous_]

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@WmB wrote:

Thank you for the link.  That addressed nicely how to apply an NOL for an ensuing year.

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You are welcome but recall, as @AmeliesUncle stated, you needed to waive the carryback for those prior years.

[WmB]

Thank you for the in depth explanation.  Using the "Other Income" entry solves my dilemma;  I was also confusing NOL with QBL with AMT loss. 

[WmB]

Question, please; where is the election to wave carryback made on the Form 1040?  Look as I might, I can find no mention of such a provision in TurboTax.

[AmeliesUncle]

The last I heard, TurboTax does not have it.  But it is possible (but unlikely) that has changed.

Usually that election is due by the due date of the original return.   The 2018 and early 2019 laws said it was no longer carried back, but a new law (due to COVID) made the carryback allowable retroactive to 2018 and 2019.

So the last I heard, TurboTax only prompts you for the carryback if you have a 2020 NOL, and does not have an option for 2018 or 2019.   If that is the case, that would mean you would need to MANUALLY create an election and MAIL it with your tax return.   And hopefully you filed an extension for 2020, otherwise it might not be allowable to file the carryback (I would need to double check those rules).

[Anonymous_]

I believe the form in the screenshot below has been in (at least) the previous two editions of TurboTax.

The link below should provide information that is applicable to the election statement.

https://www.irs.gov/publications/p536#en_US_2020_publink1000177379

[AmeliesUncle]

It lets you elect out for 2020, but I'm unaware of it allowing an election for 2018 or 2019 on your 2020 tax return.  If that is the case, it would need to be done manually and mailed.