Form 8582 - Passive Losses Limited Based On Modified AGI

Per IRS Instructions for Form 8582 Passive Activity Loss Limitations, starting page 4:

Active participation. If you actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities.

The maximum special allowance is:

  • $25,000 for single individuals and married individuals filing a joint return for the tax year.
  • $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year.
  • $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified.

Modified adjusted gross income limitation. If your modified adjusted gross income (see the instructions for line 6, later) is $100,000 or less ($50,000 or less if married filing separately), your loss is deductible up to the amount of the maximum special allowance referred to in the preceding paragraph.

If your modified adjusted gross income is more than $100,000 ($50,000 if married filing separately) but less than $150,000 ($75,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your modified adjusted gross income.

Generally, if your modified adjusted gross income is $150,000 or more ($75,000 or more if married filing separately), there is no special allowance.

The passive activity loss should import if you imported from your prior year TaxAct® return and can be found on Form 8582, Part 1, Line 1c.

To print or print preview Form 8582 in the TaxAct program, go to our Printing Your Return and Individual Forms FAQ.

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