(The existing instructions either don't work for 2019 returns or don't allow you to attach a bad-debt statement.)
You cannot. The TCJA (Tax Cuts and Jobs Act) eliminated all miscellaneous deductions (including non-business bad debts) for tax years 2018-2025. TurboTax still allows you to enter it because there are a few states that still allow it in the state return only. If the state requires such a statement then attached it to your mailed state tax return.
Thank you. As far as I see, IRS still gives it as as valid deduction for 2019 returns, see: https://www.irs.gov/taxtopics/tc453
Perhaps IRS just did not update that page, despite the 2020 date on it.
I’ll definitely look up the TCJA now, but do you happen to have a reference to the provision or a link explaining its elimination of bad debt deductions. Thank you.
A non-business bad debt can no longer be claimed as a Schedule A ordinary causality loss. It can be claimed as a capital loss on Schedule D 8949 form as explained in IRA Pub 550 page 55.
https://www.irs.gov/pub/irs-pdf/p550.pdf
Great, thank you so much for the clarification.
So there remains the question: how do I attach the page that IRS requires (detailing the bad debt) in Turbotax? or input that into Turbotax?
TurboTax adds it automatically when you enter the bad debt information in the bad debt interview.
Unfortunately Turbotax (the online premier version) does not have that screen (I assume you're using a CD version?). Turbotax does not seem to present any way of adding nonbusiness bad debt information -- all you get is the screen shown below, and no bad debt "interview."
Does anyone know how to attach the explanatory page IRS requires for non-business bad debts using Turbotax online?
To report the information for a non-business bad debt it is similar to reporting a sell of stock.
When it asks if you received a 1099-B the answer is no.
The type of investment is Other
How did you receive this investment?
Purchase
Description
Non-Business Bad Debt
Date Sold or Disposed
A date in 2019 that you decided the debt was worthless
Proceeds
$0
Cost or other Basis
The amount of the Loan
Link with more information on How to Report Non-Business Bad Deb
Thank you, I had tried that. However, that does NOT allow you to add the explanatory information that IRS requires for nonbusiness bad debt deductions.
Does anyone know how to add that explanatory page in Turbotax premier online?
Here's the information that MUST be included (quoting IRS tax topic # 453):
"A nonbusiness bad debt deduction requires a separate detailed statement attached to your return. The statement must contain: a description of the debt, including the amount and the date it became due; the name of the debtor, and any business or family relationship between you and the debtor; the efforts you made to collect the debt; and why you decided the debt was worthless."
https://www.irs.gov/taxtopics/tc453
Did you READ my post above and see the screenshot of the explanation statement that will be part of the tax return that contains that information?
The information about the bad debt that the TurboTax interview asks for *IS* the statement that is required. That is why TurboTax asks those questions which is the information that requires.
What else do you think it should be?
Did you search topics for non-business bad debt and then say you did not receive a 1099-B that takes you to the screen I posted?
A statement cannot be added to an efiled return ... you must attach a statement to a mailed in return.
@macuser_22: As I said, that "bad debt interview" screen is NOT available in Turbotax premier online. The screen that is available online does not provide all the information IRS wants (for example, listing "the efforts you made to collect the debt"). Please see my excerpt of Tax Topic #453.
(To clarify for others, I assume you are using the CD version. The Turbotax premier online version, even if you type in "1099-B and bad debt," takes you only to the screen I showed; that screen does NOT provide the information that IRS requires, nor does it give you any way of adding that information.)
@Critter, Thanks. Do you think this information from Turbotax is the way to do it? It shows up in the Turbotax help for Form 8949 but does not mention bad debt (however bad debt does go on Form 8949 and Sch D):
If you're required to mail in forms 8949 and 8453, do so within 3 days after the IRS has accepted your e-file. Here's the mailing address:
Internal Revenue Service Attn: Shipping and Receiving, 0254 Receipt and Control Branch Austin, TX 73344
(That zip code is actually a zip plus four that ends in 0254. Turbotax has a rather aggressive SSN stripping algorithm.
@lopez-post wrote:
@macuser_22: As I said, that "bad debt interview" screen is NOT available in Turbotax premier online. The screen that is available online does not provide all the information IRS wants (for example, listing "the efforts you made to collect the debt"). Please see my excerpt of Tax Topic #453.
I am sure it is. Use search topics for "bad debt, non-business" or go to the income section, investments, stock, bonds, etc. On the first screen "Did you sell any investments in 2019" answer YES.
Did you receive a 1099-B? - answer NO. Then choose non-business bad debt.
according to TurboTax 2018, Turbotax will attach the answers you provide as an attachment when e-Filing. "No further action is required on your part".
Anyway, IRS will probably deny your deduction if you can't complete the required info to the satisfaction of the IRS.
@macuser_22 That is simply not what shows up in turbotax 2019 premier online. Regardless of whether I follow your steps or any other steps I've read, the screen I posted is the one that finally shows.
Turbotax 2019 premier online edition always takes you to this question:
@lopez-post wrote:
@Critter, Thanks. Do you think this information from Turbotax is the way to do it? It shows up in the Turbotax help for Form 8949 but does not mention bad debt (however bad debt does go on Form 8949 and Sch D):
That is what the explanation statement is for. Print all forms for filing and the explanation statement should be there.
There is no explanation statement asked for in 2019 Turbotax online premier (no "bad debt interview") and so no way to e-file it. But I wonder if I can follow the 8949 directions and mail one within three days after emailing to that address given in the 8949 Turbotax directions (the one that however does not mention bad debt).
@macuser_22 Please let us know what version of turbotax you are using that has the bad debt interview (maybe CD? or maybe a different online version than premier or a different year than 2019?).
Thanks, to clarify any confusion: the problem is that the 2019 Turbotax premier online does NOT provide an interview for bad debt so it never gets the right information it needs to print out or to efile to IRS.
The question now is, given that there seems to be no way to tell Turbotax 2019 premier online all the information IRS requires for a nonbusiness bad debt deduction (short term capital gains loss), can I efile it and then separately mail the information required to IRS, based on this Turbotax help topic on Form 8949 (nonbusiness bad debts are listed on Form 8949 and Schedule D, although this Turbotax help topic does not mention bad debt):
If you're required to mail in forms 8949 and 8453, do so within 3 days after the IRS has accepted your e-file. Here's the mailing address:
Internal Revenue Service Attn: Shipping and Receiving, 0254 Receipt and Control Branch Austin, TX 73344
(That zip code is actually a zip plus four that ends in -0254.)
Talk to TurboTax Customer support for a way to get the CD/download version if you already paid for Online.
OR
if you did not pay, just quit Online and use the CD/download version.
@lopez-post wrote:
Thanks, to clarify any confusion: the problem is that the 2019 Turbotax premier online does NOT provide an interview for bad debt so it never gets the right information it needs to print out or to efile to IRS.
I think you are correct. I created a test account for online Premier and while the "Tools", search topics indeed has a "bad debt, non-business" entry, and it does take you to the investment interview, there is no choice (that I can find) for the bad debt once you get there.
I suggest calling TurboTax support on Tuesday (after the holiday) and present the issue to them.
There is no single published number because it changes contently depending on the nature of the call and agent availability. Following the link below will either give a current number for you to call or take your number for a callback.
(Note that phone support is for paying customers only. There is no phone support for Free Customers.)
Here is a TurboTax FAQ for contacting customer support.
https://ttlc.intuit.com/questions/1899263-what-is-the-turbotax-phone-number
Thanks, I'll call them up Tuesday and see if they let me transfer the information to the CD version. I haven't paid yet but really don't want to start everything from scratch!
If worst comes to worst I'll pay, print out the return, manually add form 8949 and the bad debt addendum myself, and mail it. (That's probably better than using the special IRS form 8949 address, in terms of not asking for mix-ups. )
(It would be better if Turbotax had parity between online and CD versions.)
@lopez-post wrote:
(It would be better if Turbotax had parity between online and CD versions.)
There should be. There are very few things that can be done on the desktop version that cannot also be done online. Other than this, I cannot immediately think of any other.
(There are that some situations that the TurboTax interview (online or desktop) that are not supported, but can be done by using the forms mode for direct form entry that can only be done on the desktop version. This situation does not fit into that category. )
the desktop deluxe version will have the ability to include the statement that is required.
Actually, turbotax will add the statement for you if you enter the bad debt in the correct location. This is not new as I have used it in years past. Just click Federal Taxes button, then "Deductions and Credits" and scroll down to "Other Deductions and Credits" and you will find "Nonbusiness Bad Debt". When you answer the questions, Turbo tax will make the appropriate entries, including the required attachment.