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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29926
Experience:  Taxes, Immigration, Labor Relations
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There. My wife and I discovered that we may have to

Customer Question

Hello there. My wife and I discovered that we may have to amend our 2014 federal tax return. In particular, we are not sure if we should have entered in our reported rental income losses from 2013 as a passive carryover loss for 2014. That 2013 loss was -$3351 per line 17 of Form 1040 of our 2013 federal tax return. Would you please let us know if we're on the right track? Thank you!
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Hi and welcome to our site!
Rental activity is specifically classified as passive activity.
That means - rental losses are subject to passive loss limitations.
However - if you (or your spouse if filing jointly) - actively participated in the rental real estate activity, you can deduct up to $25,000 of rental loss.
So - if you have -$3351 in net rental losses (line 17 of Form 1040) on your 2013 tax return - that loss is fully deducted on your 2013 tax return and not subject to passive loss limitations.
However, $25,000 of rental loss is fully allowed if the AGI is under $100k. If your AGI is above $100k - the allowed deduction is reduced and it's completely phased out for AGI above $150k.
So - most likely - unless you have a high AGI - you correctly deducted your rental loss on 2013 tax return - and there is no need to amend your 2014 tax return.
If you still have any doubts, need clarification - please be sure to ask.
I am here to help you will all tax related issues.