Can I claim capital losses against my ordinary income? If so, how?

Forum|Forum|5 years ago
March 21, 2021
3 replies
1 view

I incurred capital losses in the last year but turbotax is carrying them over to the next year instead of counting them against my ordinary income

TurboTax Self Employed Online

VolvoGirl

Level 15

Yes but only up to a 3,000 loss. 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. The rest you will have to carryover until it is used up.

Hal_Al

Level 15

Yes, but you are limited to $3000 per year. Any additional can be carried forward to next year and future years until used up at the rate of $3000 per year. Each year capital losses are first used to reduce capital gains before being deducted against ordinary income. Example: you lost $20,000 on stocks in 2020. You may deduct $3000 for 2020 and carry a $17,000 loss forward to 2021. In 2021, you make $5000 in the stock market; 17,000-5000= $12,000 loss for 2021, you may deduct $3000 for 2021 and carry $9000 forward to 2022.

s0undAuthor

Level 2

It seems the answer to my question is yes, but my real question is "why isn't the turbotax softwarw letting me claim my capital losses against my ordinary income? How can I resolve that issue?

VolvoGirl

Level 15

Did you enter sales? You should have a max 3,000 loss on 1040 line 7. It is subtracted from your other income. WhAt are you seeing?

s0undAuthor

Level 2

I am seeing the capital loss being carried over into 2021 instead of being used in 2020. Not sure why this might be but I can't figure out how to use the capital losses. The same thing happened in my 2019 return where it was deferred instead of being used against other income.