Question

How do I claim a nonbusiness bad debt in TurboTax?

Forum|Forum|6 years ago
January 3, 2020
1 reply
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The bad debt occurred in 2018 so I just need to claim the rollover. I've seen some articles here that mention selecting "Uncollectible Debt (Nonbusiness Bad Debt)" from a dropdown in the Capital Gains/Losses section, but that option isn't there. Also, there seem to be so many more fields than necessary - I would have expected there to be a different section for a bad debt, especially if they're going to make me pay $70 to be able to claim it.

TurboTax Premier Online

A

Anonymous_

Employee

Basically, this is simply a short-term capital loss that is reported on Form 8949.

See https://turbotax.intuit.com/tax-tips/irs-tax-return/how-to-report-non-business-bad-debt-on-a-tax-return/L1mUzQFtB

However, since the loss occurred in 2018 and was not used in that tax year, you just need to carry it forward as a short-term capital loss. TurboTax should do that for you if the 2018 return was transferred in, but you can also enter capital loss carryovers in the Investment Income section of the program.

Boyan

Employee

Hey guys,

I too have noncollectable debt as a creditor (house remodel contractor, sued, won, lean, zilch at the end) which occurred in 2010 - that's a decade ago.

Is there a limitation on when I can consider it noncollectable (which I now have) and is there a limitation on WHEN to claim it?

In terms of the TT mechanics, it seems that the software has changed so where do I exactly trigger the process of entering the bad debt (as some have clarified it is a short term investment loss)? @elliotstonertaxe if you have found where that drop list is please share it with all of us. Also what's the $70 for? Small claims filing fee?

Thank you

DaveF1006

You would need to claim it in 2010 by amending your 2010 return because that is the year you would need to claim it. However this may be pointless because you can only submit amended returns for refunds no more than three years from the date you filed your original tax return. You can also file it no more than two years from the date you paid the tax, if that date is later than the three-year rule.

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