Passive Income Loss Rules

You can t deduct the excess expenses losses against earned income or against other non passive income.

Passive income loss rules. Passive activity loss rules are a set of irs rules stating that passive losses can be used only to offset passive income. A passive activity is one wherein the taxpayer did not materially. Under the passive activity rules you can deduct up to 25 000 in passive losses against your ordinary income w 2 wages if your modified adjusted gross income magi is 100 000 or less. Using suspended passive losses for taxation purposes the irs looks at your annual income in terms of net gain or loss.

Passive activity loss rules. This deduction phases out 1 for every 2 of magi above 100 000 until 150 000 when it is completely phased out.