How to correct prior year unallowed losses from rental property that weren't carried over

You can definitely still fix this! What you need to do is file Form 1040X (Amended U.S. Individual Income Tax Return) for both 2017 and 2018. The IRS generally allows you to claim a refund within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. For rental property losses specifically, you'll need to complete and attach a revised Schedule E showing the correct carryover of unallowed passive losses from the prior year. You'll also need Form 8582 (Passive Activity Loss Limitations) for each amended year to properly calculate how much of your previously unallowed losses can be deducted. Make sure to clearly explain in Part III of Form 1040X that you're correcting previously unclaimed passive losses from your rental property that should have been carried forward.

I went through almost the exact same situation with my rental property losses from 2018-2019! After spending hours on the phone with the IRS and getting nowhere, I finally used taxr.ai (https://taxr.ai) to analyze my previous returns and it literally saved me thousands. The system flagged exactly where my passive loss carryovers were missing and generated the correct forms for my amended returns. They also have tax professionals who reviewed everything before I submitted. Their system can scan your prior year returns and automatically identify issues like missing passive loss carryovers. It was so much easier than trying to figure out Form 8582 calculations on my own!

Just wanted to update here after trying taxr.ai for my rental property issue. I was skeptical at first but decided to give it a shot since I had 3 properties with different loss situations. The system identified over $8,700 in unused passive losses that should have been carried forward from 2017-2019! It generated all the forms I needed for my amended returns, including separate Schedule E's for each property and the Form 8582 calculations showing exactly how the passive loss limitations applied. The tax pro I worked with explained everything clearly and helped me understand the at-risk limitations that had confused me for years. Honestly wish I'd found this sooner - I've probably been overpaying for years because I didn't understand the passive loss carryover rules properly. Already filed my amendments and looking forward to that refund!

If you've been trying to reach the IRS about this issue, good luck! I tried for WEEKS to get someone on the phone to explain how to properly amend my returns for missed rental losses. After 7+ attempts and hours on hold, I found Claimyr (https://claimyr.com) and it changed everything. They got me connected to an actual IRS agent in under 45 minutes who walked me through exactly how to file my amendments correctly. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained that I needed to include a statement with my amendments specifically addressing the unallowed passive losses and their carryforward amounts. That was something none of the tax preparers I talked to had mentioned! Saved me from having my amendments rejected.

I have to eat my words and admit I was totally wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway since I was desperate to resolve my rental property tax issues. Not only did it work, but I was connected to an IRS agent in just 27 minutes after weeks of failed attempts on my own. The agent pulled up my records and confirmed I could still amend my 2017-2019 returns to claim the unallowed rental losses. She even explained exactly which documentation I needed to include with my amendments to ensure they'd be processed correctly. The agent told me many passive loss carryover amendments get rejected because people don't include Form 8582 showing the calculation of allowed vs. unallowed losses. This was information I couldn't find anywhere online! Already submitted my amendments with the correct forms and documentation.

Something to consider about rental property loss carryovers: make sure you're checking the at-risk limitations and not just the passive activity rules. I amended my returns a few years ago for similar issues and discovered that some of my "unallowed losses" weren't eligible for carryover because of at-risk limitations on my particular rental property. You'll want to make sure you complete Form 6198 along with Form 8582 to determine your correct at-risk amount before calculating your allowed passive activity loss deduction.

Has anyone successfully amended returns that are 5+ years old for rental loss carryovers? I'm in a similar situation but my missed carryovers go back to 2015.

I'm dealing with a very similar situation with my rental property from 2017-2018! One thing I learned through this process is that you should also check if you qualify for any exceptions to the passive loss rules. If your adjusted gross income was under $100,000 and you actively participated in managing the rental property, you might have been able to deduct up to $25,000 in losses each year even without carryovers from previous years. Also, when you file your amended returns, make sure to include a detailed explanation of the error and attach copies of your original Schedule E and Form 8582 from 2016 showing the unallowed losses. The IRS wants to see the paper trail of where these losses originated and why they weren't carried forward originally. Good luck with your amendments - it's definitely worth pursuing since you're still within the 3-year window for both 2017 and 2018!

I just went through this exact situation last year! One thing that really helped me was creating a spreadsheet to track all my rental losses year by year before filing the amendments. I listed out each year's losses, what was allowed vs. suspended, and how much should have carried forward to subsequent years. This made it much easier to complete Form 8582 for each amended year and gave me confidence that my calculations were correct. The IRS also appreciated having clear documentation when they processed my amendments. Also, don't forget to calculate interest on any refunds you're owed - the IRS will pay interest from the original due date of each return to when they issue your refund. In my case, this added several hundred dollars to what I got back. One last tip: if your situation is complex with multiple properties or significant dollar amounts, consider getting a tax professional to review everything before you submit. The cost of a consultation could save you from potential errors that might delay your refunds or trigger additional questions from the IRS.