Rental Income Loss

[jsoles24]

On 2020's tax return, my client was single with rental property with both active and material participation. In 2020, my client was able to claim the rental passive activity loss to reduce her AGI. In 2021 my client got married, is filing married filing joint and continues to actively and materially participate in her rental property. However, in 2021 her passive activity loss is being disallowed. Why is the loss being disallowed?

[TaxGuyBill · Accepted solution]

Income too high?

[jsoles24]

With her husband's AGI, her 2021 AGI is double her 2020. So I believe that yes her passive activity loss phased out because her AGI is greater than $150,000 for MFJ. In 2020 when she was Single, her AGI was $108,000 so she was able to take a portion of her passive activity loss. Thanks TaxGuyBill 

[abctax55]

Form 8582 will show you what is happening.  As Bill points out, the income is probably too high.  And nope, MFS wouldn't solve the problem.

[jsoles24]

Thank you so much!! 8582 did show me why the loss was being limited.

[abctax55]

YVW... 

(give me a solve... I'm trying to catch Susan @sjrcpa 🙂

[TaxGuyBill]

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@abctax55 wrote:

(give me a solve... I'm trying to catch Susan @sjrcpa 🙂

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😂