You are correct. Pennsylvania (PA) tax law is clear on losses in each class of income. In your case it's a capital loss on an investment. The oval itself only confirms the overall loss on the Line 5 class of income. And that the loss cannot be used to change your income or income tax. The e-file specifications are set by the IRS and the states which leads me to believe, the overall income or loss is key.
If there is a loss in one category or class of income such as the sale of investments reported on Schedule D, it cannot be used against any other class of income. For example, a capital loss on an investment or stock sale, cannot offset wages or any other class of income. The loss can only be used against gains in the same class of income to reduce or eliminate gains. Any loss that may remain is lost and can never be carried forward to another tax year. You should see the correct figures on the Schedule D, however on page one, that loss will not be used to reduce any other income class.
As far as last year, the law was the same. Please update here if you have additional questions and we will help.
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