Does Turbotax choose (or let you choose) whether to use long-term or short-term capital losses to offset 3,000 in ordinary income?

[pher]

I know that after short-term capital losses offset short-term gains, and after long-term losses offset long-term gains, any leftover loss can be used to offset 3,000 in ordinary income each year.

If you have both short-term and long-term losses left over, will TurboTax automatically choose one or the other to offset the 3,000 in ordinary income? And/or is there a way to select which one on my end in the product?

The reason I ask is because my understanding is it could be considered more tax-advantageous to prioritize using the long-term losses to offset first. This is because while long-term loss would normally offset a long-term gain (thereby offsetting $3,000 at the 15/20% capital gains tax rate -- so, that offsets $450 or $600), by having it offset income instead it "upgrades" and offsets a higher amount based on your tax bracket (for demonstration purposes, let's say your bracket is 37% -- that's offsetting $1,110 instead). This upgrade essentially gives your long-term loss an "extra value" of $660 or $510.

In contrast, since short-term losses are taxed at the normal income rate, there's no difference between offsetting a short-term loss or offsetting normal income, so there's no extra value to be gained.

[Mike9241]

There is no choice to be made. It's the tax laws that dictate which is used and Turbotax follows the tax laws. first  short-term gains and losses are netted as are long-term. if one type is gains and the other type losses, they are netted and if the result is net losses whichever category produces the net losses is used. if both categories are net losses short-term are used first.

To complicate things a little the nets are after any election to carryback section 1256 losses (regulated futures contract losses if they exist) .