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Level 2

Whats the maximum amount I can write off for my business loss on personal income tax (1040)

Hey, I'm working for an employer full time, making $100,000 USD; I invested around $500,000 in my business in Asia. I almost lost everything! So, I want to know what's the maximum amount I can write off for my business loss on personal income tax (1044)?

 

Also, what's 80% NOL Limit Rule?

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Level 15

Whats the maximum amount I can write off for my business loss on personal income tax (1040)

The form I believe to which you are referring is 1040. 

 

Regardless, there is no limit to deducting a net loss from a business against other income provided that you materially participate in that business. Note that the loss must be a loss from operations rather than a loss from an investment.

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Level 15

Whats the maximum amount I can write off for my business loss on personal income tax (1040)

NOL limitation suspended. Section 2303 of the CARES Act suspends the 80% of taxable income limit on NOL carryovers for 3 years. The limit will not apply to tax years beginning in 2018, 2019, and 2020. 

 

See https://www.irs.gov/publications/p536

 

There is no technical limit; if you have a "business" loss, the loss can be used to offset other income. 

 

If you have an NOL for a tax year ending in 2019, you may carry back the entire amount of the NOL to 5 years before the NOL year, and carry forward any remaining NOL indefinitely.

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Level 2

Whats the maximum amount I can write off for my business loss on personal income tax (1040)

Dear, first of all, thank you so much.

 

What I mean is that I lost 500k on my s-corp business, I wanted to know can I write off the entire 500k on my 1044 against full-time employment income?

 

Since, i thought maybe there 250k per year limit,etc.

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Level 15

Whats the maximum amount I can write off for my business loss on personal income tax (1040)

The form I believe to which you are referring is 1040. 

 

Regardless, there is no limit to deducting a net loss from a business against other income provided that you materially participate in that business. Note that the loss must be a loss from operations rather than a loss from an investment.

View solution in original post

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Level 2

Whats the maximum amount I can write off for my business loss on personal income tax (1040)

My bad, typo. 

 

Thank you so much for your valuable answer. 

So, basically, that means, I can write off my entire 500k ( Operation Loss ) for the year against my employment income of 200k?

 

That would mean, I will have 300k in carrying loss carry forward! 

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Level 10

Whats the maximum amount I can write off for my business loss on personal income tax (1040)

With this large amount of money, you really need to be going to a tax professional.

 

It is also unclear in what way you "invested" that money and lost it.  Depending on the exact details, it is possible some or all of that may not yet be able to be claimed as a loss.

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