Question

Capital loss carryover

Forum|Forum|1 year ago
August 29, 2024
2 replies
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Am I right with these, if I have capital loss carryover from prior year:

Capital losses deduction in a tax year is limited to $3,000 including applying the carryover from prior year?

Say, if we have a $4,000 loss in a tax year, we could only deduct $3,000 and the other $1,000 add to carryover of prior year?

If we have no gain or loss in a tax year, we can deduct $3,000 carryover from prior year to our earned income?

Thanks

VolvoGirl

Employee

Yes. But if you carried over 1,000 and have no current year losses you only can deduct the 1,000.

If you have investment sale losses, after you subtract the losses from your gains you can only deduct up to 3,000 per year. You can only deduct up to 3,000 (1,500 MFS) loss per year after any gains you have. So if you have a lot of current gains you can use up the loss. The rest you will have to carryover until it is used up.

N

NCPERSON1

the capital loss carryover must be used to:

1) first used offset any capital gains THEN

2) reduce ordinary income. You use the lesser of the remaining carryover (after consideration of #1) or $3,000. Anything left over is carried forward another year.

So if you had a $4,000 carryover and no capital gain, $3000 gets used to reduce ordinary income and the remaining $1,000 gets carried over to the following year.

Then next year, assuming no capital gains, you have $1,000 to reduce ordinary income (not $3,000)

S

SLYKTAXAuthor

Thanks you and Volve girl.

I want to make sure what I read was right. You said:

"Then next year, assuming no capital gains, you have $1,000 to reduce ordinary income (not $3,000)"

I am not limited to $1000 deduction next year, correct? The reason you said $1,000 is because I only have $1,000 Carryover, correct?

BUT if I still have some carryover from past years that haven't been depleted,

Then next year, assuming no capital gains, I can have $3,000 to reduce my ordinary income, correct?

VolvoGirl

Employee

Yes but the past year carryover is deducted first each year. You only have 1 carryover amount, whatever wasn't used the last year. Yes if you have more losses than gains or only have the carryover loss you can deduct up to 3,000 max (1,500 MFS). If you don't use up the full prior year carryover you carryover the rest to the next year.