Question

MFS Passive actitivity loss

Forum|Forum|6 years ago
June 8, 2019
1 reply
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I am filing my 2018 tax forms using MFS and have a rental passive activity loss( with active participation) of $2700 for a total of 2 years This is less than the $12500 loss for MFS allowed by the IRS.

My earnings are under the limit. Why does Turbotax say:

*You are filing Married Filing Separately (MFS) and you live with your spouse during the year. This reduces allowable losses to zero.

Does this mean that if I filed MFJ, I could use up to $25000 loss and as MFS nothing?

What if I change to MFJ in 2018? could I use $2500 or $2700?

What if I change to MFJ in 2019? would I lose the loss or could I still use it?

Since I owe about $500 in taxes, the $2700 loss would help. If I filed MFJ, I would have the $24000 standard deduction, but I want to stay MFS since my husband is a NRA.

TurboTax Premier Windows

Critter

Employee

*You are filing Married Filing Separately (MFS) and you live with your spouse during the year. This reduces allowable losses to zero. Because those are the rules ... the program is quoting it direct from the IRS instructions.

Does this mean that if I filed MFJ, I could use up to $25000 loss and as MFS nothing? Yes it does.

What if I change to MFJ in 2018? could I use $2500 or $2700? 2700

What if I change to MFJ in 2019? would I lose the loss or could I still use it? The unallowed loss carries forward until such time as it is deductible.

Since I owe about $500 in taxes, the $2700 loss would help. If I filed MFJ, I would have the $24000 standard deduction, but I want to stay MFS since my husband is a NRA. That is a choice you will have to make for yourself ... but if you do file jointly all of his income would also need to be reported... choose wisely.

Is it better to file Joint or Separately?
https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separately

How can we compare married filing jointly with married filing separately?

If you already created a joint return in the TurboTax CD/Download software, there's a quick way to see how filing separately affects your federal return.

Note: This won't work in TurboTax Online.

1. Open your return and select Forms in the top right corner of the window.

2. Click Open Form and type What-If Worksheet (it may appear as What-If Wks).

3. Check the MFJ vs. MFS box at the top.

4. Scroll down to Balance Due (Refund) located under Line 74.

o The second column shows the federal outcome for a joint return, and the third and fourth columns, respectively, show the outcome for the taxpayer and spouse if filing separately.

o Negative numbers are refunds, positive numbers are taxes due.

However, this doesn't give you the whole picture because it doesn't account for your state return. For a true apples to apples comparison, you'll need to prepare your returns both ways.

Related Information:

· How do I switch to Forms Mode in the TurboTax for Windows software?

· How do I switch to Forms Mode in the TurboTax for Mac software?

· How do I switch from filing jointly to filing separately?