Passive Losses from prior years

[superbean2008]

I’ve owned a few rental properties for several years, and there are passive losses from 2021 and 2022 for two of the properties that weren’t fully deductible at the time, so they were carried forward. In 2023, my wife qualified as a Real Estate Professional (REP), so we filed our taxes for that year using REP status.

Now, as I’m preparing our 2024 federal taxes with the same REP status, TurboTax has imported our 2023 tax information. It correctly prefilled the passive loss carryovers from 2021 and 2022:

• 2021: $1,243

• 2022: $824

However, it also prefilled a passive loss carryover for 2023 in the amount of $867, which I found confusing.

Since we filed under REP status for 2023, I was under the impression that all the losses from that year should  be active losses and have been fully deducted and not carried over (my income was high enough to cover all the losses). I also checked our 2023 tax return but couldn’t find any reference to the $867 amount. I can find the 2021 and 2022 losses in the corresponding tax return.

Usually these prefill by TurboTax is correct.  Could this be an error in TurboTax? Or is there a scenario where a carryover from 2023 would still occur even under REP status?

[PatriciaV]

While TurboTax normally transfers carryovers correctly from last year to your current return, it's possible this function wasn't successful for you this year. 

Since you were able to confirm the correct carryovers from your prior year return, you may wish to delete the errant carryover amount. You can do this in TurboTax Online, but it's easier with TurboTax Desktop using Forms Mode. 

Passive carryovers are reported on the Schedule E Worksheet for the related property.

When you find a number you need to change that is in a black font, right-click the number and choose "Data Source." This will bring up a box with a hyperlink to the form where that number was sourced. If the number is still black on that form, repeat the Data Source + hyperlink to follow the number to the next form.

When you reach a number in blue, you can revise that number without creating a form error. Any form with a red exclamation point has an error. Click the Errors icon above the forms list to see an explanation of that error below the form when opened in the large window.

Any number in green was imported from last year and should not be changed - unless this is the carryover you need to delete.