The first step to calculate net operation loss is to subtract standard deduction or itemized deduction from AGI.
Let's say my AGI is -12000 and the standard deduction is 12000. What's
the result of the subtraction? is it -24000 or 0? I'm not sure if I
should do the math using absolute number.
On Mon, 8 Aug 2022 10:19:29 EDT, Lenny Miller wrote:
The first step to calculate net operation loss is to subtract standard
deduction or itemized deduction from AGI.
Let's say my AGI is -12000 and the standard deduction is 12000. What's
the result of the subtraction? is it -24000 or 0? I'm not sure if I
should do the math using absolute number.
It's zero, but having two $12,000 numbers in your example makes that
pretty obscure. The computation is AGI minus the total of several
things including standard deduction or itemized deductions. Assuming
you don't have any of those other things, AGI of $-12,000 minus
standard deduction of $12,000 is $-24,000 mathematically.
But take a look at form 1040. Line 15, which is where you enter the
result of the subtraction, says "Taxable income. ... If zero or less,
enter -0-".
If your AGI is negative, subtrating _any_ positive number from it
will give a result less than 0, so your taxable income will be zero,
not negative.
(I'm working from <https://www.irs.gov/pub/irs-pdf/f1040.pdf>, which
is the 2021 form. But even if line 15 has a different number on the
2022 Form 1040, I think it's overwhelmingly likely that the line
where you enter taxable income will still have a floor of zero.
On Mon, 8 Aug 2022 10:19:29 EDT, Lenny Miller wrote:
The first step to calculate net operation loss is to subtract standard
deduction or itemized deduction from AGI.
Let's say my AGI is -12000 and the standard deduction is 12000. What's
the result of the subtraction? is it -24000 or 0? I'm not sure if I
should do the math using absolute number.
It's zero, but having two $12,000 numbers in your example makes that
pretty obscure. The computation is AGI minus the total of several
things including standard deduction or itemized deductions. Assuming
you don't have any of those other things, AGI of $-12,000 minus
standard deduction of $12,000 is $-24,000 mathematically.
But take a look at form 1040. Line 15, which is where you enter the
result of the subtraction, says "Taxable income. ... If zero or less,
enter -0-".
If your AGI is negative, subtrating _any_ positive number from it
will give a result less than 0, so your taxable income will be zero,
not negative.
(I'm working from <https://www.irs.gov/pub/irs-pdf/f1040.pdf>, which
is the 2021 form. But even if line 15 has a different number on the
2022 Form 1040, I think it's overwhelmingly likely that the line
where you enter taxable income will still have a floor of zero.
On Mon, 8 Aug 2022 10:19:29 EDT, Lenny Miller wrote:
The first step to calculate net operation loss is to subtract standard
deduction or itemized deduction from AGI.
Let's say my AGI is -12000 and the standard deduction is 12000. What's
the result of the subtraction? is it -24000 or 0? I'm not sure if I
should do the math using absolute number.
I'm still confused. The instruction in the Worksheet 1 says:
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