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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 10110
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Can excess tax deductions be carried forward to the next tax

Customer Question

Can excess tax deductions be carried forward to the next tax year to offset income.
Thank you
Submitted: 3 months ago.
Category: Finance
Expert:  Lane replied 3 months ago.

Hi. My name's Lane ... I can help here.

...

The answer depends on the type of deduction;

  • personal itemized deductions are only allowed in the year paid; any unused amount, regardless of the reasons for the limitation, are lost and cannot be carried forward to future years.
  • Business deductions for pass through entites (sole proprietorship, LLC, partnership S-Corp) can reduce personal tax liability to zero and then caried back and forward (two years back and five forward for most) this is called a NOL (Net Operating Loss)
  • SOME tax credits, such as energy credits can be carried forward
  • CAPITAL losses ca be carried forward

...

But so sorry, the tax law is very clear ... PERSONAL deductions are cannot be carried forward.

...

Let me know if you have questions

...

Lane

...

...

I hold a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

Expert:  Lane replied 3 months ago.

Hi. My name's Lane ... I can help here.

...

The answer depends on the type of deduction;

  • personal itemized deductions are only allowed in the year paid; any unused amount, regardless of the reasons for the limitation, are lost and cannot be carried forward to future years.
  • Business deductions for pass through entites (sole proprietorship, LLC, partnership S-Corp) can reduce personal tax liability to zero and then caried back and forward (two years back and five forward for most) this is called a NOL (Net Operating Loss)
  • SOME tax credits, such as energy credits can be carried forward
  • CAPITAL losses ca be carried forward

...

But so sorry, the tax law is very clear ... PERSONAL deductions cannot be carried forward.

...

Let me know if you have questions

...

Lane

...

...

I hold a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986