Is the Schedule E expenses in Turbo Tax not ready yet? Keep getting a "not started" when a figure has been inputted.

[Anonymous_]

Please provide more details as that section of the program should be complete.

[JamesG1]

I am able to establish a Schedule E in TurboTax Self-Employed Online to include reporting income, 1099-K, assets and expenses.

Perhaps you want to exit the software and re-enter.

[jasonmburks]

We have rental income from a Short Term rental, but have substaintal losses for the year.  My spouse is a realtor so it should pass on as nonpassive losses.  Losses do not seem to be flowing into the 1040 (should not have any limitations).  Just shows $0 as income.

[GeorgeM777]

Does TurboTax reflect that your spouse is a Real Estate Professional (assuming your spouse is a REP)?  As a Real Estate Professional, the losses would not be passive losses.  If the Real Estate Professional status does not apply, does your spouse meet the active participation rules.  Generally, the active participation rules allow those in a real estate activity to offset up to $25,000 of rental losses each year against non-passive sources.  There are limitations, of course, and the key to qualifying is the requirement to "actively participate" in the rental activity.

Here is the formula for determining whether, under the active participation rules, you can deduct some of your losses.  If modified adjusted gross income (Modified AGI) is above $100,000, the $25,000 limit is reduced according to the formula (Modified AGI - $100,000) X 50% = AMOUNT REDUCED BY.  For example, if Modified AGI is $130,000, the deduction would be REDUCED BY ($130,000 - $100,000) X 50% or $15,000. The deduction would then be $10,000 ($25,000 - $15,000). The benefit is lost entirely if Modified AGI reaches $150,000.

@jasonmburks

[Anonymous_]

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@jasonmburks wrote:

My spouse is a realtor so it should pass on as nonpassive losses. 

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That would only be the case if your wife materially participated in the rental activity as a real estate professional. Merely owning rental property as a real estate professional is insufficient.

[jasonmburks]

She does all the advertising, bookings, scheduling, etc.  We don't use a management company at all.  She does it all front to back.  I would think this would suit the material clause, no?

[jasonmburks]

She is a real estate professional as a full time job, as well as manages all aspects of the STR (advertising, bookings, scheduling, working with contractors etc). I would think this would be nonpassive.

[AmyC]

Correct, not passive but is it material participation, that is the crux of the situation. Please see where IRS Pub 527 for Rental Property lists these rules:

Real estate professionals. If you are a real estate professional, complete line 43 of Schedule E. You qualify as a real estate professional for the tax year if you meet both of the following requirements. 

• More than half of the personal services you perform in all trades or businesses during the tax year are performed in real property trades or businesses in which you materially participate. 

• You perform more than 750 hours of services during the tax year in real property trades or businesses in which you materially participate. 

If you qualify as a real estate professional, rental real estate activities in which you materially participated aren’t passive activities. For purposes of determining whether you materially participated in your rental real estate activities, each interest in rental real estate is a separate activity unless you elect to treat all your interests in rental real estate as one activity. Don’t count personal services you perform as an employee in real property trades or businesses unless you are a 5% owner of your employer. You are a 5% owner if you own (or are considered to own) more than 5% of your employer's outstanding stock, or capital or profits interest. Don’t count your spouse's personal services to determine whether you met the requirements listed earlier to qualify as a real estate professional. However, you can count your spouse's participation in an activity in determining if you materially participated.