How do I report ordinary income or ordinary lossess in TurboTax? Note this is not interest or dividends or anything from the options provided.

Are you a day trader? For what purpose is the Mark to market?

I am not a day trader. Just regular person with a foreign investment account. It's a PFIC so I have to do mark to market on form 8621

The Mark-to-Market Election

Traders can choose to use the mark-to-market rules, investors can't. If a trader doesn't make a valid mark-to-market election under section 475(f), then he or she must treat the gains and losses from sales of securities as capital gains and losses and report the sales on Form 1040, Schedule D (PDF), Capital Gains and Losses and on Form 8949 (PDF), Sales and Other Dispositions of Capital Assets, as appropriate. When reporting on Schedule D, both the limitations on capital losses and the wash sales rules continue to apply. However, if a trader makes a timely mark-to-market election, then he or she can treat the gains and losses from sales of securities as ordinary gains and losses (except for securities held for investment - see above) that must be reported on Part II of Form 4797 (PDF), Sales of Business Property. Neither the limitations on capital losses nor the wash sale rules apply to traders using the mark-to-market method of accounting.

Hi, I am a regular investor, see form 8621: <a rel="nofollow" target="_blank" href="https://www.irs.gov/forms-pubs/about-form-8621-return-by-a-shareholder-of-a-passive-foreign-investment-company-or-qualified-electing-fund">https://www.irs.gov/forms-pubs/about-form-8621-return-by-a-shareholder-of-a-passive-foreign-investment-company-or-qualified-electing-fund</a> I'm afraid your answer won't help as I have no Business Property.

removed

TurboTax does not support Form 8621. You would have to fill it out by hand and and mail in the return. Line 5 has c) Section 1296 (Mark to Market)
Any amount included in gross income under subsection (a)(1), and any gain on the sale or other disposition of marketable stock in a passive foreign investment company (with respect to which an election under this section is in effect), shall be treated as ordinary income.

(B)  Loss Any—
(i)   amount allowed as a deduction under subsection (a)(2), and

(ii)  loss on the sale or other disposition of marketable stock in a passive foreign investment company (with respect to which an election under this section is in effect) to the extent that the amount of such loss does not exceed the unreversed inclusions with respect to such stock,

shall be treated as an ordinary loss. The amount so treated shall be treated as a deduction allowable in computing adjusted gross income.

<a rel="nofollow" target="_blank" href="https://www.law.cornell.edu/uscode/text/26/1296">https://www.law.cornell.edu/uscode/text/26/1296</a>

Exactly! So my question is, where do I input *in TurboTax* those ordinary input or loss?

Line 21.Other income.  (Other Income Line in 2019 is Line 7a)

That helped! Then I found these instructions based on "line 21": You can report it as other income on Form 1040 line 21. Here's how to enter it in TurboTax.

·         Click the Federal Taxes tab ( Personal in the Home & Business version)

·         Click Wages & Income. (Personal income in the H & B version)

·         Click "I'll choose what I work on."

·         On the screen "Your 2015 Income Summary," scroll all the way down to the last section, "Less Common Income."

·         Click the Start or Update button for the last topic, "Miscellaneous Income, 1099-A, 1099-C."

·         On the next screen, "Let's Work on Any Miscellaneous Income," scroll down and click the Start or Update button for the last topic, "Other reportable income."

·         The next screen asks, "Did you receive any other taxable income." Click Yes.

·         On the next screen, "Other Taxable Income," enter a description and the amount. Click Continue.

·         On the next screen click Done.

The income will be reported on Form 1040 line 21 with the description that you entered.

In 2020 Premier version, when I entered Section 1296 (PIFIC form 8621) LOSS under 1099-Misc - Turbo Tax generates a Schedule C and enters it there. but this is NOT a business!

Mark-to-Market gain/loss is supposed to be entered under ordinary Income. I can only enter it as a loss if I create a 1099-NEC which then correctly enters is as a loss in Schedule 1 Line 8. How can I edit the entry "non employee compensation from 1099-NEC" to "Form 8621 Section 1296?

You can enter the 1099-MISC in TurboTax as Other Common Income, which is reported on line 8 of 1040 Schedule 1 and will not generate Schedule C or SE tax.  Please use the following steps:

1. Click on Federal > Wages & Income.
2. Scroll down to the Other Common Income section. 
3. Click on the Start/Revisit box next Form 1099-MISC. 
4. On the screen Did you get a 1099-MISC?  click on the Yes button.
5. On the next screen, Let's get the info from your 1099-MISC, enter the information from the 1099-MISC.
    
6. On the following screens, answer the following questions:
   • Did it involve work that's like your main job? No.
   • You got it in 2020
   • No, it didn't involve an intent to earn money

 7.  Continue through the rest of the interview screens. The income will appear as Other Income.

@LalG

Many thanks for the instructions. This only works if reporting an income. I have a LOSS and 1099-MISC does not let me enter negative number. So far only way is to create a NEC but i cannot edit the entry under Sch 1, Line 8. I want to edit the TT generated text "from Non-employee compensation" to enter Section 1296 (Form 8621). 

It depends. Try entering the 1099-Misc in this manner.

1. Go to federal>income and expenses>all income>>show more 
2. Less Common Income> Start
3. Miscellaneous Income,>start
4. Other reportable income>start
5. Next screen asks Any Other Taxable Income>yes
6. The next screen will allow you to report the income with a brief explanation.
7. For the explanation, you can make reference to the "1099-MISC-non-employee income." and enter the negative amount with a minus sign and amount. 

Best Answer - lets you add the description and the NEGATIVE amount as well 

Hi, 

I am filing 8621 section 1296 MTM election.

This time I have an ordinary loss to report.

It occurs to me that I need to report my section 1296 ordinary loss in schedule 1 line 24 item z. which is then reported in sch1 line 26 and finally on 1040 line 10. (and not line 8 ! )

Is there a way to get there, or should I get the negative amount trick said above and then print and swap a corrected schedule 1? and a corrected 1040 with the loss in line 10 and the actual other income in line 8?

Many thanks

does anyone have an idea about this?

many thanks.

what version of TurboTax are you using? 

hi,

the current online version

I'm about to buy Turbo for the 2024 tax year.  I have already made the 475 MTM election for that year.  When i download transactions from my broker, does Turbotax allow me to mark these to be loaded into Part 2 of form 4797?  (instead of into Sch D...)

TurboTax does support reporting transactions under the Section 475 Mark-to-Market (MTM) election, which allows you to report your trades as ordinary income on Form 4797 instead of capital gains on Schedule D. However, there are some things to be aware of:

1. Form 4797 Part 2: TurboTax allows you to report MTM transactions in Part 2 of Form 4797, but this may require manual entry or adjustments. Some users have reported challenges with directly entering data into Part 2 without using "Forms Mode" in the desktop version. There is not a place where you can choose to have these 
2. Broker Downloads: When you download transactions from your broker, TurboTax typically categorizes them for Schedule D by default. To ensure they are reported under Form 4797, you may need to manually adjust the entries or use the interview process to specify that these are MTM transactions.
3. Limitations: If you're using the online version of TurboTax, it might not fully support the MTM election. The desktop version, particularly TurboTax Home & Business , is often recommended for traders with this election.

I would strongly recommend using Turbo Tax Home and Business Desktop version to ensure these transactions are properly reported on Form 4797, especially if you are a day trader.

I am using Turbo home & Business.  I have just done my first download of trades.  Of course, the trades went to Sch D via Form 8949.  I don't see any way to "manually adjust the entries".  So, i intend to 'remove the import', while looking for another way.

You say "To ensure they are reported under Form 4797, you may need to ... use the interview process to specify that these are MTM transactions."  How, where do you use the interview process?

What section do I go to to tell Turbo to report these as MTM?

You say this can be done, i am full of hope for your reply.

The interview is step-by-step mode.   See this TurboTax FAQ.

You can use TurboTax Online, unless you intend on taking a home office deduction on Schedule C.   To do that with reporting mark to market, you will need the desktop software.   If you are not taking a home office deduction, either version will work to report your transactions, with or without the mark to market election.  @Stevied3 

Dawn, 

  Super big THANKYOU!  One follow-on... As a trader I qualify for QBI...which should show up via 8995.  (I have the desktop version).  I opened the 8995 and attempt to make entries...but the software does not recognize my right to do so.  How do i tell Turbo that the entries in 4797 are QBI, and therefore (I believe) it would throw that data into 8995 on its own?  All that to gain me the 20% QBI benefit.

Steve

You need the desktop software to adjust the QBI worksheet.  @Stevied3 
 

1. Go into Forms mode.  Find Schedule C for the business that earned the income that is listed in the 4797.
2. Scroll down to the section of Schedule C, named Qualified Business Income Deduction Smart Worksheet.
3. Go to line 4b, Adjustments to qualified business income.
4. Type the income from 4797, into this adjustments field.  The income should now appear in the associated QBI worksheets and calculations.
5. Click through the Schedule C interview again.  You might or might not be prompted with new questions after changing the form directly.