Today TaxMama hears from Clyde in Florida, with this oopsie! “My wife and I have rental properties and we reported losses for 2006 and 2007. We recently found out about Form 8582 and the Passive Activity Loss Limitations rule. Our income without the rental losses exceeded $150,000. What should we do?”
That’s interesting. I do understand the compulsion to prepare your own tax returns. It does feel great to be in control. But are you doing them by hand?
Even for seasoned tax professionals, doing a complete tax return by hand is out of the question these days. There are too many limitations to take into account, not to mention the alternative minimum tax, computation to consider.
If you used tax software, either in a box or online – it would have generated the Form 8582. Uh, that is, unless you checked the box saying you’re a real estate professional.
Regardless. If you are certain that you took the rental deductions to which you weren’t entitled, you need to filed amended returns for 2006 and 2007 to correct that error. Use Form 1040X.
TaxCut still sells prior year versions of the software
Or this site offers prior year versions of TurboTax software.
If you’re going to amend anyway, please turn it over to a tax professional. There are bound to be other errors in your return, sorry to say.
And remember, you can find answers to all kinds of questions about correcting errors and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
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