Will there be any late penalties for filing Form 1040X? I've already completed my 2022 tax return, and the IRS may owe me $3,000 for capital loss.
If the 1040-X shows that you get an additional refund, there will be no penalty. (There would be a penalty if you owed additional tax, but that is not your situation since you are adding a capital loss.) The IRS will not owe you anywhere near $3,000. See the next question.
If Form 1040X is approved, will the IRS issue a $3,000 refund for 2022?
No, you will get a refund, but not $3,000. The capital loss will reduce your taxable income by $3,000. It does not reduce your tax by $3,000. The amount of the refund will depend on your other income, what tax bracket you are in, and possibly side effects of the change involving other things on your tax return. The refund will be much less than $3,000. It might be only a few hundred dollars.
Additionally, can I still carry over $3,000 for 2023, $3,000 for 2024, and $1,000 for 2025?
The amount of the capital loss that is used each year is not necessarily $3,000 every year. It depends on what else is on your tax return each year. If you did not have any capital gains in 2022, the carryover from 2022 to 2023 will be the entire remaining loss, after using $3,000 of the loss in 2022. TurboTax will calculate the carryover to 2023 when you do your 2023 tax return. But you may not be able to use the entire carryover on your 2023 tax return. How much you can use in 2023 and how much gets carried over to 2024 or future years depends on what else is on your tax return each year. TurboTax will do the calculations for you each year until the entire loss is used up.
You mentioned holding off on filing the 2023 tax return until the issue is resolved. But if the IRS hasn't resolved it by April 15, 2024, would I need to file extension Form 4868?
Filing an extension would be the best course of action. The IRS definitely will not process your 1040-X by April 15. It is currently taking at least 20 weeks for an amended return to be processed.
