Yes, you can claim $25,000 passive losses against your W2 income during a tax year. If the property loss is more than your income, you will not receive a refund or credit for the net loss. Here is how it works.. If your W2 income is $20K and your rental loss is $28K, $25K is used to reduce your W2 below zero. $3k is a suspended loss that is carried forward into the next tax year. In this situation, $20K - $25K = ($5K) For tax purposes, that ($5000) is negative income but you do not receive a credit or a refund for the deficit. It just merely moves your taxable income to 0. Now if your W2 income is $30K and your rental loss is $28K, $25K is used to reduce your W2 to $5K. In this scenario, $30K-$25K = $5k. $3k is a suspended loss that is carried forward. If your losses are below $25k, then the entire amount will be used to reduce your W2 income. In some cases, it may not be your best advantage to claim passive losses especially if your W2 income is below the filing threshold.With all of this said, you will not file your non-resident return with Turbo Tax. We have an affiliate called Sprint Tax. In this link, they have easy to use software that will guide you through the return as seamlessly as possible.

Question

Hello, I am a non resident person, have W2 and rental property loss, Can my property loss offset my w2 income? if property loss is more than my income, can I get refund?

Forum|Forum|5 years ago
March 31, 2021
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DaveF1006

Yes, you can claim $25,000 passive losses against your W2 income during a tax year. If the property loss is more than your income, you will not receive a refund or credit for the net loss. Here is how it works..

If your W2 income is $20K and your rental loss is $28K, $25K is used to reduce your W2 below zero. $3k is a suspended loss that is carried forward into the next tax year. In this situation, $20K - $25K = ($5K) For tax purposes, that ($5000) is negative income but you do not receive a credit or a refund for the deficit. It just merely moves your taxable income to 0.
Now if your W2 income is $30K and your rental loss is $28K, $25K is used to reduce your W2 to $5K. In this scenario, $30K-$25K = $5k. $3k is a suspended loss that is carried forward.
If your losses are below $25k, then the entire amount will be used to reduce your W2 income.
In some cases, it may not be your best advantage to claim passive losses especially if your W2 income is below the filing threshold.

With all of this said, you will not file your non-resident return with Turbo Tax. We have an affiliate called Sprint Tax. In this link, they have easy to use software that will guide you through the return as seamlessly as possible.

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Carl11_2

Employee

Be aware that if by "non-resident" you mean that you are a non-resident alien in the U.S. "for tax purposes", then you can not use TurboTax to complete and/or file your tax return.