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Question

Does my 2022 long-term capital loss carryovers being reduced sound correct if my tax rate on those gains is 0%?

Forum|Forum|3 years ago
March 4, 2023
2 replies
0 views

TurboTax applied a long-term gain to capital loss carryovers on form Sch. D Part II. My tax rate for those gains is 0%, meaning my net long-term loss carryover should not have been changed from 2021. I had no tax liability on LT gains in 2022.

TurboTax Premier Online

The tax rate does not affect the carryover- the carryover is applied to your gains. Unfortunately, just because you cannot take advantage of the losses does not suspend them.

kcarl56152Author

I believe my husband and I have no 2022 long-term gain. We are in the 0% tax bracket with taxable income of less than $12 thousand on Line 15 of our 1040-SR. We think that means the long-term gain of $22 thousand is not taxable and should not be used as a gain against our long-term capital loss carryovers. Correct?

Employee

First, the carryforward losses are applied to reduce gains,

then your applicable tax rate is calculated on the result.

you can't defer the adjustment, just because your tax might be zero without it.

Employee

But If you have a negative AGI or negative taxable income it will show up on 1040 BUT it won't reduce the carryover to the next year.