A carryover loss must be calculated each year to carryforward. There is a worksheet depending on what type of loss and it will be use it or lose it. Not having to file a tax return doesn't mean that you still shouldn't at least prepare a tax return every year (though you need not file it), as a record of of your year-to-year long-term capital loss carryover.
Because of certain "oddities" let's say, having to do with IRS ordering rules in the way that deductions are applied against your income (even when an individual falls below the IRS filing threshold), your capital loss may slowly be eaten away -- even if you don't use it.
In short, it's a complicated subject. To understand how long-term capital loss carryovers are treated for those who do not file an income tax return, or who have low taxable income, we respectfully direct you to some of our source materials. The underlying concepts (and some useful examples) are discussed in depth on the following webpage.
It's up to you if you want to lose it completely by not carrying it over. The tax returns not filed, never begin a statute of limitations, which means they are open for all future years. You are not allowed to postpone using it or saving it for a more advantageous time.
It's important to file your tax returns to start that statute of limitations for IRS review.
You can choose to file this return, then amend it later to include the carryover loss once all prior returns have been completed.
As far as the wash sale rules go, you are not allowed to take a wash sale loss, so you can enter a sales and purchase price of equal value and keep a record of the loss and add it to the cost basis of stock you re-purchased. See more information below.
If you sold stock and then repurchased the same stock within 30 days then 'Wash Sale' rules would apply.
- Wash Sale: The wash sale rule prohibits selling an investment for a loss and replacing it with the same or a "substantially identical" investment 30 days before or after the sale. If you do have a wash sale, the IRS will not allow you to write off the investment loss. Instead this loss gets added to the cost basis of the stock that is still owned until it is sold at a later time without any repurchase within the same time period noted.
[Edited: 02/21/2021 | 12:23p PST]
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