When you prepare your tax return with TurboTax, the software automatically tracks and carries over your QBI business losses to the next year’s tax return.
The QBI deduction is based on net income, so if your business had a net loss, you don't qualify for the QBI deduction for that year. A net loss gets carried over to the next year’s QBI calculation, and is used to offset any future year's QBI income for your K-1 business.
In other words, when the QBI deduction is calculated, your current year’s QBI is reduced by any losses from the previous year. This is called a loss carryover.
If you are preparing your return for the first time in TurboTax, you’ll need to indicate that you have carryovers from the prior year, and manually enter those amounts.
Here's how to do this:
For TurboTax Online
- Sign in to your TurboTax Online account and continue to your return
- In the section Wages & Income, enter the carryover amount under Other Business Situations
- Select Start next to Net Operating Loss/QBI Carryforward Loss
For TurboTax CD/Download - Premier
- Sign in to your TurboTax CD/Download Premier account and continue to your return
- Enter the carryover amounts in the Wages & Income section, under Business Items
- Select Start next to Business Deductions & Credits, then select Net Operating Loss
For TurboTax CD/Download - Home & Business
- Sign in to your TurboTax CD/Download Home & Business account and continue to your return
- Enter the carryover amounts in the Business Income & Expenses section
- Under Less Common Business Situations, select Start next to Net Operating Loss/QBI Carryforward Loss