Do I need to file? For 2020 I was unemployed with ZERO income, I did not collect stimulus or any unemployment benefits. I sold stocks for a capital loss of -$4,678.00

[leondesp]

I am 46 years old, single and was living with my sister rent free in CA if that matters.

[Bsch4477]

Sounds like your sister can claim you as a dependent (even if she doesn’t) so you would not be eligible for the stimulus. But you could file to declare your stock loss which can be carried over to future years to offset income. 

[leondesp]

I did not think about letting her claim as a dependent, aside from that the main question of if I need to file or not still needs to be answered. You not mentioning that makes me assume that I do not need to file at all?

[Bsch4477]

You need to file if your income was greater than $12,400.  If your stock proceeds were more than that you should file because the IRS computer might flag that, not knowing that you had a loss but only “seeing” the gross proceeds. As I mentioned previously, by filing and reporting your loss, you get to offset income in the future. So aside from the question of having to file, you might want to file for that reason. 

[leondesp]

Thanks for the response...

Just to clarify I had zero income so I am less than the 12.4k ...

and my stock sales resulted in a -4k capital loss so they are not more than that. However the gross before tax harvesting to achieve the capital loss was above that. 

Are you saying that I should file "only if" I want to carry my -4k capital loss over to 2021 ?

Or is filing "Required" ? 

[Hal_Al]

It's complicated.

You are not required to file because you are under the income limit ($12,400 for a non dependent and $1100 of unearned income for someone who COULD be a dependent.  Your "income" for this test is the net gain from the sale of stock, not the gross proceeds. 

That said, there's a chance the IRS computers  will see the gross proceeds and send you a dunning letter.  But if your sale was "covered" (the broker reports the cost  basis as well as the sales amount), the 1099-B will reflect  the actual capital loss and satisfy the IRS computers.

I'm of the opinion that you do not need to file a tax return to carry your loss forward.  You only need to adjust the carry forward for the amount that woulda been used if you had filed a return  (0 adjustment in your case*). 

*Technically, if your standard (or itemized) deduction is greater than your AGI, without  the capital loss, then all your capital loss is carried forward. 

[Bsch4477]

Filing is not required. But you should file for the reasons given. 

[Hal_Al]

As to qualifying as a dependent; if you are supporting yourself from savings and stock sales, then you are not necessarily your sister's dependent just because you live with her.   She must have provided more than half your support.

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf The support value of a home is the fair market rental value, divided by the number of occupants.

If you are her dependent, that qualifies her for a $500 (non refundable) "Other dependent" tax credit. 

[leondesp]

Thank you for the feedback ...

Ok that seems to answer my questions... my broker is TDA and the 1099-B does show the cost basis as well the details of all stock sales resulting in the capital loss clearly.

Appreciate the help

[leondesp]

regarding the dependent I am not going to even bother with this. Thank you again!

[fanfare]

You do realize I hope that if you have no income you are eligible for EIP 1, EIP2 and future EIP3 of $1,400.

The only way to get that is to file a 2020 tax return.

You must not be a dependent on another taxpayer's return.

And yes you should file to establish your capital loss carryforward which will carry forward entirely  if you have no income