How long do carrover credits last

[MONEYMAN6]

I am semi-retired and possibly retired. I have carrover credits from 2 years ago. How long do these credits last and if I am retired are these credits lost if I no longer have earned income? Can I use these credits after I sell my house if my house nets more than $250,000? Can I use these credits to reduce my income if I have capital gain and interest?

Joel

[RichM3]

There are different types of carryovers and they don't all work the same - from your question it looks like you're asking about carryovers from a capital loss - example, from selling stocks at a loss. As you inferred, you cannot claim a net loss of more than $3,000 on your individual tax return if you are not in the business of trading stocks (which it sounds like you are not). So the simple answer to your question is they are carried forward indefinitely.

These credits reduce your taxable income - which can be earned income, but also income from investments, gambling, the taxable portion of social security, etc... So yes, if you have a gain on the sale of your main residence that is in excess of the exclusion ($250K, as you said, or $500K if filing a joint return with your spouse), then the carryover from prior year losses will reduce the taxable income related to this. But I would suggest thinking of it more broadly as reducing your taxable income, whatever makes up that taxable income.

[MONEYMAN6]

Thanks for your previous reply. I should have specified that I had a carryover of approximately $3,500 from my business. The carryover was a result of my expenses being more than my income. 

So from your previous answer this is what i am thinking.

The carryover never expires.

I can use the carryover to reduce my taxes if I have earned income or I sell a house that nets me more than $250,00

If I am correct then I have one more question.

I am assuming that my carry over can only be used for earned income from a business or from the sale of my house but will not reduce my income from the sale of stocks or any unearned income such as interest, dividends or capital gains.

Thanks again.

Joel

[FranklinF]

As stated earlier by my colleague, there are different types of carryovers and they don't all work the same.

Based on your comments that your expenses were greater than your income, I am assuming that maybe you operated as a Sole Proprietor and that you did DID NOT MARK THE BOX THAT SAYS THAT ALL INVESTMENT IS AT RISK which will result in what you described earlier of not being able to claim th.e deduction. If the above is the case:
-> Your carryforward will expire with the termination of the business.
-> Yes. Schedule C losses do offset other forms of income.
-> You can actually claim ALL the loses in the current tax year if you CHECK THE BOX THAT SAYS THAT ALL INVESTMENT IS AT RISK.

As for the capital gains, if there is any, of selling your home, the taxes are assessed separately. They are referred as Capital Gains Taxes which are taxed at a preferred  rate is certain conditions are met.