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Question
If I am married, how can my spouse help me with my passive losses?
AI accountant’s answer:
If you are married, your spouse can help with passive losses by participating in the activity and generating passive income. When you and your spouse file a joint tax return, the passive losses from one spouse's activities can be used to offset the passive income from the other spouse's activities. That means if one spouse has passive losses and the other one has passive income, you can combine both on your joint tax return to potentially reduce your taxable income. However, it's important to remember that passive losses can only offset passive income, not non-passive income such as wages or business income from an active trade. If you don't have enough passive income to offset your passive losses, the excess losses may be carried forward to future years until they can be applied against passive income or until the passive activity is disposed of. It's also worth noting that there are certain income limitations that may apply to deducting passive losses. If your modified adjusted gross income (MAGI) exceeds $100,000 for joint filers ($50,000 for single filers), your allowable passive losses start to phase out, and they are completely disallowed when your MAGI reaches $150,000 for joint filers ($75,000 for single filers). However, these phase-out rules don't apply to real estate professionals who meet specific requirements. Always ensure that both you and your spouse are following the tax rules and regulations surrounding passive income and losses, and consider consulting with a tax expert to optimize your tax situation.
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