What Is Form 8582? Form 8582 Complete Guide by a CPA!

Form 8582 is the IRS tax form used to determine the amount of your passive activity losses for the year (including prior-year passive activity loss carryforwards) as well as how much of these losses may be deducted this year and how much must be carried forward to next year.

Definition and Example of Form 8582

Form 8582 is the tax form used to calculate your allowable passive activity losses for the year.

For example, if a taxpayer has $10,000 of passive losses generated this year, a $5,000 prior-year passive activity loss carryforward, and $8,000 in passive income this year, they may only be allowed to deduct $8,000 of passive activity losses this year.  This limitation, as well as the allocation of allowed and unallowed losses to the taxpayer’s passive activities, is calculated on Form 8582.

Who Uses Form 8582?

Form 8582 is used by individuals and the IRS.

Individuals

Individuals use Form 8582 to determine the tax characteristics of their passive activity losses.

The IRS

The IRS uses Form 8582 to ensure that taxpayers deducting passive losses are allowed to do so based on the passive activity loss rules.

Where to Get a Form 8582

Form 8582 can be downloaded from the IRS website as a PDF.

If you use a tax software to file your taxes, you can simply complete Form 8936 in your tax software as well.

How to Fill Out Form 8582

Form 8582 has nine parts.

Part I is used to calculate your net passive activity losses for the year.

Part II is used the amount of passive losses attributable to rental real estate activities in which you actively participate that you may deduct as a special allowance of up to $25,000.

Part III is used to determine the total passive activity losses you may deduct on your tax return this year.

Part IV is used to list out all your different rental real estate activities in which you actively participate in, along with their respective income and losses for the year.

Part V is used to list out all your other passive activities, along with their respective income and losses for the year.

Part VI is used to allocate your special allowance of up to $25,000 for passive losses attributable to rental real estate activities in which you actively participate among these activities.

Part VII is used to allocate your unallowed passive activity losses among all your passive activities.

Part VIII is used to allocate your allowed passive activity losses among all your passive activities.

Part IX is used to determine, for passive activities whose losses are reported on multiple schedules, how much of each of these activities’ losses should be reported on each schedule.

Can Form 8582 Be E-Filed?

Yes, Form 8582 can be e-filed as part of your tax return.

However, if there is some aspect of your tax return that prevents your tax return from being e-filed, you would have to mail your tax return, including Form 8582, to the IRS.

Where to Mail Form 8582

If you paper file your tax return, you would mail Form 8582 along with your tax return to the address found in your tax return’s instructions.

How to File Form 8582

Form 8582 is filed with the tax return for the year you are claiming the qualified plug-in electric drive motor vehicle credit.

You can e-file your tax return using a tax software or professional preparer or you could print out your tax return, including Form 8582, and mail it to the IRS.