Have negative $7,000/loss on my 2018 return but still showing $5,500 Fed Taxes owed-What am I missing?

[Fsch1970]

Hi,

I am completing my personal 2018 taxes with Home and Business.   After putting in income, business expenses and k-1 passthrough losses of $81,000, it is showing I lost $7,000 in income.  However, it also shows $5,000 in Federal Income Taxes Owed...

How can I owe taxes on a loss?  Am I not doing something right?  Please help!

FS

[AnnetteB6]

If you had a profit on a Schedule C business, which was offset by your pass through losses, you would still owe self-employment taxes on that Schedule C profit.  

For 2018, look at your return to see if Schedule 4 has been included.  Self-employment tax is shown on line 57 of 2018 Form 1040 Schedule 4.  There will also be a Schedule SE included as part of your return.

(If you are preparing your 2019 return, self-employment tax is shown on line 4 of 2019 Form 1040 Schedule 2.)

[Fsch1970]

Hi,

Thanks for replying.  I have a k-1 with a loss of $83,000 that are supposed to pass through to my personal taxes because I helped operate the business..but I am not seeing those losses reflected anywhere...or am I only supposed to get credit for a part of those losses?

Thanks for your help:)

[RobertG]

It depends on the kind of loss shown on your K-1. 

If it is an ordinary business loss from a business in which you actively participate, it should show up in full on Schedule E.

If it is a passive loss, such as a real estate loss, it would be limited to passive income.