Passive Losses Carried Over Form 8582

[rebecca2024]

This is my first year filing my own taxes through TurboTax whereas before, a CPA did mine. When reporting passive losses carried over from 2022, Turbotax has a field for Shedule E Regular Tax carryover. It says "If you had Form 8582 last year, look for this info on Page 2 Worksheet 5". In my 8582 form from 2022 Page 2 Worksheet 5, I have:

Current Year Net Loss b)  1,254

Prior Year Unallowed Loss c) 4,672

Overall Loss e) 5,926

In the "Learn More", it says: "To determine if you have any passive activity losses carrying forward from the prior year, look to last year’s Form 8582, Page 2, Part 7 (VII), and identify whether there is a line item for this activity that has an amount in “Unallowed loss." Part 7 (VII) of Form 8582 shows the amount of the unallowed passive activity losses for this activity. " 

So in my 2022 Form 2022 Part 7, it says my unallowed loss c) is 5,926.

So for my 2023 tax filing, should I enter 5,926 into the field that says "Sch E Regular Tax Carryovers"? Or would it be one of the other numbers from Part 5?

[DianeW777]

Yes, $5,926 shows as an unallowed loss for 2022 on your Form 8582. Enter that amount in your 2023 tax return in the field 'Sch E Regular Tax Carryovers'.  Be sure to keep your 8582 for 2023 because you may need to enter any unallowed 2023 losses on your 2024 tax return.  You are doing great on your own.

[rebecca2024]

Thank you! I just submitted my filing and took a look at the Form 8582 that was just generated for 2023. Now, Parts 5 and 7 have been left blank, but part 4 now shows an overall loss of 5,926 plus 1,467 = 7,393. Has the form changed for 2023? And next year Turbotax will tell me to look in Part 4 instead of part 5 and 7? 

[DianeW777]

Take a look at line 11, page 1,  to see what the number is there.  It's possible the entire loss was allowed this year.  Let me provide the details about the limitations while you check it out.

Active participation is a requirement to be allowed to reduce other income by the loss on your rental property.  There is also an income limit that begins to reduce that amount.

Phaseout Rule: The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that’s more than $100,000 ($50,000 if you’re married filing separately). If your modified adjusted gross income is $150,000 or more ($75,000 or more if you’re married filing separately), you generally can’t use the special allowance. This is because the special allowance is reduced to $0 since the modified adjusted gross income is over the $100,000 amount.

• Sign into your TurboTax return > Search (upper right) > Type rentals > Press enter > Click on the Jump to... link > Edit next to the Rental Activity  > Edit next to the Property Profile or General Info > Continue to the question about active participation
• Continue to the end of the section for TurboTax to save your changes.

[Mike9241]

you have it correct the -5926 is entered in that box.  It needs to be enter as a negative. 

if done correctly it will appear on Form 8582 line 1c if you actively participate 

[rebecca2024]

Is it true as the other commentor said that I should have entered the 5926 number as a negative? I entered it as a positive number and submitted the taxes already. The screen for this part of the filing could due with more detail because it is extremely confusing. 

[DianeW777]

The screen does not indicate you must enter the minus sign for TurboTax Online.  You do have to do that in TurboTax Desktop.

If you used that you should see the loss printed on your Schedule E and see if there is any carryover of unused loss on Form 8582, Part VII, Column C or Part VIII Column B.  You will look in this same section (2023 Form 8582) for any unallowed losses in 2024.

@rebecca2024 

[lbilling]

Thanks for your accurate response. I also had an Unallowed loss in 2022 on Form 8582. However, I sold the Rental Property in February 2023 for a gain. The sale is shown on Form 4797 Sale of Business Property. I cannot find a place to include the Unallowed Loss in 2022. 

In the Step-by-Step interview, when I checked the box for a sale of the Rental Property, it eliminates the property from Sch E and moves it to Form 4797. 

Where or how can I list my 2022 Unallowed Loss?

Thanks. 

[DianeW777]

It will be listed in the rental property section.  The following instruction should help you with the location to enter your carryover loss.  You must go into the rental property income section first, then follow the steps to enter your carryover loss.

1. Any passive activity loss (PAL) carryforwards allowed would be listed on your Form 8582, Worksheet 5 or 6, in your 2022 tax return as 'unallowed loss'.  If you have a PAL and it does not seem to be populated in your 2023 tax return you can take the following steps to enter it.
   • Use the magnifying glass to Search (upper right) > Type rentals > Jump to Rentals > Select Edit beside your Rental Activity  > Under Less Common Situations > Review Carryovers, limitations, at risk info, etc. > Continue to enter your passive loss carryover.  See the image below for assistance.

• @lbilling