Still confused about schedule 1 rental loss, HELP!

Forum|Forum|3 years ago
April 2, 2023
1 reply
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I used Turbotax home&buisness desktop version. Before filling the tax, the software says that my risk for audit is high. So I saved the tax return in PDF and looked over it.

On schedule 1, loss from rental activity -$26858 was put on Line 5. Gains from selling two rental properties $19018 were put on Line4. Loss from my first year realtor business -$3445 was put in line 3.

Then everything was combined and the final loss -$9210 was transferred to 1040 line 8. The final result is my rental property loss was used to offset my W-2 income. Is this right? I thought my rental loss is passive and should be carried over to the next year. But everything was entered following the instruction of the software.

For the question about real estate professional (spend more than 750 hours + spent more than 50%), I selected "None of the above". For each of the rentals I have, I selected "No, I'm not an active participant".

I attached screenshot of the schedule 1 and 1040.

Should I be worried about the high risk of audit? If I entered everything correctly, will I be liable for how the software calculate and generate each forms?

Thank you in advance!!

TurboTax Home & Biz Windows

Mike9241

first what's 20Z - normally a 1099-NEC is business income subject to self-employment tax - maybe it should flow to schedule C. no way to be sure because you provided no details. you sold a property that frees up any suspended passive losses related to that property and these offset wages and other ordinary income. audit risk is relative.

see this link for more info from the IRS about audit risk 2019

https://www.irs.gov/pub/irs-utl/statement-for-updated-audit-rates-ty-19.pdf

audit risk by TT may be more of a marketing tool to sell you premium features.