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Old 02-18-2009, 11:34 AM
 
746 posts, read 2,245,766 times
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Default tax question -- negative taxable income for an individual?

Does anyone know the answer to this question?

If you do your taxes and discover that you have a negative taxable income amount for the year (which results when your deductions are greater than your taxable income), does this equal a net operating loss as it would in the case of a corporation with losses greater than income? Important note: This person's sole income is social security disability, and the deductions would be medical deductions.

If so, can you carry back the negative tax amount for two years, as a corporation can in the event of a net operating loss?

Any thoughts appreciated!
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Old 02-18-2009, 02:26 PM
 
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I think if you look at the schedule A (?) you'll see that the amount of medical deductions is LIMITED to a CERTAIN % of Adjusted Gross Income (AGI). Due to that limitation it would be impossible for those deductions to exceed the AGI. Come to think of it, with that little bit of income it's unlikely they'll be using the long form anyway.

But I'm not a CPA. Most cities/counties have someplace that persons in the situation you describe can receive FREE assistance when filing their taxes.

golfgod
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Old 02-18-2009, 04:56 PM
 
Location: Alexandria, VA
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It can happen that you won't owe any taxes but that's the best you can do - "they" won't "credit" you for the future tax-wise.
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Old 02-19-2009, 07:34 AM
 
Location: Forests of Maine
21,319 posts, read 26,126,562 times
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Quote:
Originally Posted by barndog View Post
Does anyone know the answer to this question?

If you do your taxes and discover that you have a negative taxable income amount for the year (which results when your deductions are greater than your taxable income), does this equal a net operating loss as it would in the case of a corporation with losses greater than income? Important note: This person's sole income is social security disability, and the deductions would be medical deductions.

If so, can you carry back the negative tax amount for two years, as a corporation can in the event of a net operating loss?

Any thoughts appreciated!
I have had a negative a few years. their AGI is set to ZERO.

You can not carry anything back.

This happens for folks who have other sources of income as well, not just SSI people.

On my military paycheck I have had a ZERO AGI most years.
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Old 02-19-2009, 11:32 AM
 
Location: Chicago (Albany Park)
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Quick answer - yes, individuals can have net operating losses, but non-business deductions (like medical expenses, personal exemptions, charitable contributions, etc.) can't create a net operating loss. The rules say that when computing an NOL you can only deduct non-business expenses to the extent of non-business gross income. So in this case, even if the ss disability payments were taxable income (I don't think they are) when computing the NOL you would be limited to deducting medical expenses up to the amount of the disability payments. Result - no NOL.
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Old 02-19-2009, 12:03 PM
 
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thank you, everyone, so much! your answers are greatly appreciated!
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Old 09-07-2009, 04:39 PM
 
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Default negative taxable income for an individual

Thepreacherswife is exactly right. well said!
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Old 09-08-2009, 08:37 PM
 
8,902 posts, read 10,204,134 times
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Quote:
Originally Posted by barndog View Post
Does anyone know the answer to this question?

If you do your taxes and discover that you have a negative taxable income amount for the year (which results when your deductions are greater than your taxable income), does this equal a net operating loss as it would in the case of a corporation with losses greater than income? Important note: This person's sole income is social security disability, and the deductions would be medical deductions.
No.

Deductions reduce your taxable income to zero. There is no refund if deductions exceed income.

Go to Internal Revenue Service to inquire about the VITA program which provides free tax preparation services to taxpayers with income under $35k. If the person in over 60, the AARP provides a similar service.
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