How to Report Losses on a Tax Return

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When filing your income tax return you are required to report any losses you incurred during the tax year. Income tax loss comes in several forms; business loss, capital gains loss, farm loss and other losses. Each is reported by filing a specific form and transferring the total from said form to your federal individual income tax return form 1040. Failure to accurately report your losses could result in a misrepresentation of your income tax situation and potential fees and penalties.

Report any business loss you have on Schedule C. Using your business tax information for the year fill out Schedule C and place the total amount of your loss from line 48 of Schedule C on line 27 of form 1040 to report your business losses for the tax year.

Obtain Schedule D to report your capital gains loss. Capital gains are taxes paid on the sale of a home or other property. To fill out this form you need the sales information and purchase information regarding each property. Fill out Schedule D and report the total from line 21 on line 13 on your 1040 form.

Complete Schedule F if you are a farm owner. Use your farm information for the tax year to complete Schedule F and report the loss from line 36 on line 18 of your federal form 1040.

Obtain form 4797 to report other losses on your income tax return. Fill out the sections required – which is based on your personal tax situation and enter your other losses on form 1040 line 14. Use the instructions for form 4797 to walk you through each line of the form as you fill it out.

Tips

  • Each of these forms and schedules are available on the Internal Revenue Service’s website, at any post office or any tax office. You can have forms faxed to you by the IRS or you can download them from your computer.

References

About the Author

Tiffany Raiford has several years of experience writing freelance. Her writing focuses primarily on articles relating to parenting, pregnancy and travel. Raiford is a graduate of Saint Petersburg College in Florida.

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