Capital Gains Losses Carry Forward from 2022

[techie353]

Hi! If I have say $250k losses incurred this year after all capital gains and losses calculated. This $250k should carry over to next year 2023. Should I be able to deduct first, long term gains then short term gains? Then anything else up to $3,000 for ordinary income? Please confirm.

[Mike9241]

if you have both net short and net long-term capital losses. short-term gets used first. you do not have any say in the matter. if you have other net income. up to $3K will be deducted. This reduces the carryforward to 2023.

[techie353]

@Mike9241

Can you clarify once again... short term gets used first then long term, correct? Last is if you have net income (up to 3k). Did I understand accurately?

[Mike9241]

Can you clarify once again... short term gets used first then long-term, correct? yes.

up to $3,000 of capital losses can be used to offset other income.  figure taxable income without the capital loss. if it's more than $3,000 then $3,000 of capital losses will be used.  if taxable income is less than $3,000. then the lesser amount will be used.   page 1 of the 1040 will always show the $3,000 loss, (the IRS rules not Turbotax) but Turbotax will correctly compute the actual carryover.  

[techie353]

@Mike9241

I think all capital either short term or long term losses are carried over year after year (for life) until I use the amounts for future capital gains. Is this correct? Thank you very much for your replies!

[VolvoGirl]

Yes your first post was right.  You get to first offset the loss against any gains you have each year so that can use more of it up. Then after applying the loss to the current gains you can take a max loss of 3,000 per year. 

[VolvoGirl]

On the income page The 2022 column shows the carryover to 2023 (not your current loss for 2022). Schedule D doesn't actually show the carryover amount. To find your Capital Loss Carryover amount you need to look at your return schedule D page 2. Line 16 will be your total loss and line 21 should be a max loss of 3,000. The difference between line 16 and 21 is the carryover loss for next year.

There is also a Carryover Worksheet showing the carryover from the prior year and the current amounts. Then there is also the Capital Loss Carry Forward worksheet showing the amount transferring over to next year.

In the Online version you have to save your return with all the worksheet as a pdf file to your computer to see the Capital Loss Carry Over and Carry Forward worksheets.

In the Desktop program you can go to Forms and find it in the list in the left column.

[Mike9241]

up to $3000 in capital losses can be used each year to offset other income which reduces the amount carried forward to next year. .