Will my business losses this year reduce my total taxes due?

Forum|Forum|3 years ago
March 13, 2023
1 reply
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My business loss did not impact my total taxes due. Why?

TurboTax Online

Best answer by AliciaP1

It depends on what type of business activity and losses you are reporting. If your activities qualify as passive activities, the losses can only offset other passive income so you will have a loss carryover. See Passive Income and Losses or Net Operating Losses for more details on your situation as it applies.

AliciaP1Answer

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kenmicnAuthor

Thank you for your reply and the link to the IRS documentation. However, if you could explain passive income/expenses that would be helpful.

MayaD

IRS consider passive income: Trade or business activities in which you don't materially participate during the year. Rental activities, even if you do materially participate in them, unless you're a real estate professional.

Your passive activity loss for the tax year is the excess of your passive activity deductions over your passive activity gross income

You materially participate in an activity if you're involved in the operation of the activity on a regular, continuous, and substantial basis.

IRS.gov

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