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

[Donatien]

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

[Donatien]

does anyone have an idea about this?

many thanks.

[Mike9241]

what version of TurboTax are you using? 

[Donatien]

hi,

the current online version

[Stevied3]

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...)

[DaveF1006]

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.

[Stevied3]

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.

[DawnC]

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 

[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

[DawnC]

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.