Capital Gains Loss

Forum|Forum|3 years ago
June 6, 2022
2 replies
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Hello, If I do not make any income in year 1 and have $2,000 in stock market losses, then the following year 2, I make an income, can I use those losses from year 1 towards my taxable income in year 2?

Thank you in advance for the response,

Not A Product Question

Mike9241

yes because with no income in year 1 you do not lose any capital loss carryover

however, you must file in year 1 so the IRS doesn't bounce the return in year 2 for the use of an unreported capital loss carryforward.

MLL16Author

Thanks Mike, greatly appreciated!

Hal_Al

Employee

It depends on what "I do not make any income in year 1" means.

If you had no income, at all, then your entire capital loss carries forward to the next year. If you only mean you had no income from investment sales, then your capital loss, in year 1 (up to $3000), is used to reduce your other income in year 1 and will not carry forward to year 2.

This also assumes your stock market losses were "realized" in year 1. That is you actually sold stocks and realized the loss and didn't just have a reduction in the value of your stock holdings.

MLL16Author

Thanks Hal, I appreciate the response. Yes, those losses would be realized year 1 and I was also referring to not having regular job related earned income as well, thanks for clarifying.