I forgot to include a 1099 in 2020 that would have resulted in additional capital losses to be carried forward (I had recognized the $3k max capital loss in 2020, so any incremental loss has no impact on that year's tax obligation). I would like to use this loss in 2021. I have a couple of questions:
1. Do I need to file an amended 2020 return to update Schedule D to capture the incremental carry forward amount given there is no change to the 1040?
2. If yes to 1, do I need to wait until 2020 is accepted to file an amended 2021 return?
Did you file the 2020 tax return and was it accepted by the IRS? If so, then you need to amend the 2020 tax return to add the 2020 Form 1099-B you received.
See this TurboTax support FAQ for amending a 2020 tax return - https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-return/amend-2020-return/L3XdA1Pw8_U...
A 2020 amended tax return can only be printed and mailed, it cannot be e-filed.
If you have a capital loss carryover based on the 2020 amended return then you report the carryover on the 2021 tax return, assuming you have not yet filed the 2021 return.
For a capital loss carryover -
- Click on Federal Taxes (Personal using Home and Business)
- Click on Wages and Income (Personal Income using Home and Business)
- Click on I'll choose what I work on (if shown)
- Under Investment Income
- On Capital Loss Carryover, click the start or update button
Or enter capital loss carryover in the Search box located in the upper right of the program screen. Click on Jump to capital loss carryover
If you have filed the 2021 return then you should wait for the 2020 amended return to be processed before amending the 2021 tax return.
NOTE - It may take up to a year before the IRS completes the processing of an amended tax return.
Very helpful. Thank you!
Quick follow-up---both 2020 and 2021 returns were filed. When you say that I should wait for 2020 to be accepted before amending the 2021 return--are there any implications to filing both concurrently? If I receive a letter on the 2021 amended return, would I just be able to submit the updated Schedule D and 1099-B statement from 2020 to resolve?
The IRS claims that they process amended tax returns in the order received. So if you file the 2020 amended return before the 2021 amended return a letter from the IRS about the 2021 amended return should not be necessary. However, since this is the IRS there is no guarantee they will follow their own procedure.
You should mail the 2020 amended return using a tracking service from the US Post Office so that you know that the IRS actually received the paper return.
For the 2021 amended return you should wait at least one month before filing the return. The 2021 amended return should be able to be e-filed using TurboTax if e-filed on or before October 17, 2022. However, if for some reason the return cannot be e-filed then again use a tracking service for the mailed 2021 amended return.