At risk loss carryforwad vs QBI loss carryforward

[TaxTurist]

My 2020 schedule C From 8995 line 3 and line 6 show QBI net loss carryforward of ~$8000. In Turbotax (Home and Business), under the section "Let's get your at risk carryovers"  I have 3 options to record it on the left  "At-risk loss carryover" from schedule c and on the right "QBI at-risk loss carryovers" or put the same (or other) numbers in both?

Where do I record my loss from previous years on the right or the left?

Why does TurboTax call it carryovers when the IRS refers to it as carryforwards?

What is the difference between the at-risk loss and the QBI at-risk loss?

Thanks,

[DianeW777]

Question: Where do I record my loss from previous years on the right or the left?

• In your first screen image you record the loss on both the right (if applicable) and the left. The left is the actual QBI loss carryforward and the right is the amount of the loss for which you are at risk. The at-risk rules prevent taxpayers from deducting more than their actual stake in a business.  If you do not have loans or money that you are not responsible to repay, then you would have amounts that are not at risk.

Question: Why does TurboTax call it carryovers when the IRS refers to it as carryforwards?

• The words are interchangeable and are both used by TurboTax and the IRS.  The word carryforward has been used more recently and more often than in the past.

At risk means the same whenever it is used (definition above).

In the second image you need to enter the QBI losses that pertain to each year and the combined total should equal the total.

[TaxTurist]

Thank you. That was very helpful!

Turbotax however could do a better job here explaining everything in this section. Every other section was very well explained and we didn't need to rely on additional help (thanks again for providing it) so more clarifications will go a long way here

[dbranstrom]

Follow-up question: I have a QBI at-risk carryover from prior years of $(24,391) that I entered per your solution and noticed that TT applied this to my current year tax return on line 27a Other Expense on Schedule C. TT described it as Section 465(d) carryover. I then noticed the Qualified Business Loss carryforward from PY line 3 of form 8995 reflected an amount that is double of the PY carryover totaling $(48,782) and also reflected a QBI on the carryover wks in the current year net of CY QBI. It doesn't make sense whey there would still be a carryover loss on the CY tax return if it was utilized to offset CY business income.

[PatriciaV]

Please confirm that the QBI at-risk carryover was not transferred from your prior year return and that is why you manually entered this amount.

[dbranstrom]

The total QBI at-risk carryover from prior year did transfer into current year return in the following area:

In TurboTax Online, enter QBI carryforward as follows:

• Click the down arrow to the right of Other Business Situations.
• Click Start / Revisit to the right of Net Operating Loss / QBI Carryforward Loss.
• Enter QBI Carryovers at the screen Qualified Business Income Loss Carryovers.

I then entered the the QBI loss carryover per this solution provided and reflected the total loss carryover for each previous year. Trying to figure out why the QBI loss carryover would reflect double on form 8895. How do I know if it applied the carryover loss correctly? Doesn't make sense why this would be entered in both places.

[ThomasM125]

If you used TurboTax in the prior year, your QBO loss carryforward will be automatically entered into your current year program, so you shouldn't enter it again in the current year. Your number may be doubled up because you entered it in the Other Business Situations section as you mentioned. You may need to revisit that section and remove the entry.

@dbranstrom