Passive Activity Loss and Unemployment

Forum|Forum|4 years ago
April 17, 2022
1 reply
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In 2020 I received unemployment compensation. I'm also a landlord. On schedule 1 line 5, I entered my passive activity loss of approx $5000. On line 7, I entered my unemployment compensation of approx $15000. So, line 9 came out to approx $10000 which gets entered on 1040 line 8. My question is .. Did the unemployment compensation from 2020 eliminate the passive loss carryover of approx $5k for 2021? Also, in 2020 I filed before the IRS changed the rules for not taxing pandemic unemployment. The IRS sent me a check later in the year to offset the taxes. Thank you.

MinhT1

No, unemployment income cannot offset passive losses. And your unemployment income in 2020 (up to $10,200) has been excluded from taxation as the IRS has sent you an additional refund.

Only passive gains can offset passive losses.

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