NOL carryover confusion, not auto-generated? -- Pub 536 Worksheet 3 result has a confusing result

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YeedTheirLastHaw
YeedTheirLastHaw Member Posts: 2 Newcomer
edited April 5 in Credits/Deductions

I had a negative AGI for 2022 and it would seem that with FreeTaxUSA I need to manually calculate Publication 536 (to determine what value I can carryover from 2022 into year ending 2023 and place on my 1040 Schedule 1, Line 8A).

Everything seems to make sense until I get to the end of Worksheet 3, requiring the result of Form 461. It seems like this is expecting to be a negative number?

Since it doesn't look like there was an "excess" loss from 461 should I enter ZERO on Worksheet 3, Line 3?

Pretty confused here.

https://www.irs.gov/pub/irs-pdf/p536.pdf

https://www.irs.gov/pub/irs-pdf/i461.pdf

Answers

  • CoryF
    CoryF FreeTaxUSA Agent Posts: 65
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    Thank you for joining our community, Yeed.

    I believe you went too far in the Publication 536 in calculating your NOL. Worksheets 2 & 3 are for multiple years of NOLs and to carry your NOL forward two years from 2022 to 2024. Ignoring these worksheets for multiple years, your 2022 NOL is calculated correctly on Worksheet 1 with the resulting NOL of (45,022) to apply to your current year 2023 tax return Form 1040 Schedule 1 line 8A.

    It is easy to get caught up in the worksheets placed in the publications, however the previous paragraphs to Worksheet 2 show that it is only for carryforward of your NOL from 2023 to 2024. This is too complicated for your situation as described in your entry above with the negative AGI in 2022.