If you sell stocks, bonds, derivatives, or other securities through a broker, you can expect to receive one or more copies of Form 1099-B in January. This form is used to report gains or losses from such transactions in the preceding year. Check your 1099-B for information about the transaction that showed a gain. A gain can be used to offset losses, in addition to the annual $3,000 maximum.
In most cases, a 1099-B form provides information about securities or property involved in a transaction handled by a broker.
This includes:
- A brief description of the item sold, such as “100 shares of XYZ Co"
- The date you bought or acquired it
- The date you sold it
- How much it cost you to acquire it
- How much you received for it when you sold it
- Whether your broker withheld any federal tax
The 1099-B helps you deal with capital gains and losses on your tax return. Usually, when you sell something for more than it cost you to acquire it, the profit is a capital gain, and it may be taxable. On the other hand, if you sell something for less than you paid for it, then you may have a capital loss, which you might be able to use to reduce your taxable capital gains or other income.
See this help article for more information about Form 1099-B.
Carryover losses on your investments are first used to offset the current year capital gains if any. You can deduct up to $3,000 in capital losses ($1,500 if you're Married Filing Separately). Losses beyond that amount can be deducted on future returns as a capital loss carryover until the loss is all used up.
For example, if your net capital loss in 2023 was $7,000 and you're filing as single: You could have a deduction of $3,000 of the loss on your 2023 return, $3,000 on your 2024 return, and the remaining $1,000 on your 2025 return. This is true if you have no capital gains to offset your losses.
Unfortunately, you can't pick and choose which future tax year(s) you wish to apply your carryover to. Carryovers from this year's return must be applied to next year's return.
See this TurboTax help article for more information about capital loss carryovers.
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