How to apply Capital Loss Carryover from prior years

[binguyen]

I'm using the desktop TurboTax Premier version and could not figure out how to I apply a Capital Loss Carryover that I have from 2008.  The 2024 TurboTax version only asks for information from the 2023 tax return.  I would really appreciate any help!

[MarilynG1]

If you had a Capital Loss Carryover from 2008, that amount would be carried over each year for a deduction of 3K each year, until the loss is used up. 

You would see the Long Term Capital Loss Carryover each year on Schedule D, Line 14, with calculations shown on the Capital Loss Carryover Worksheet, Line 13.  You can enter your amount directly in FORMS mode, or you are asked in the Step-by-Step interview under Investment Income > Capital Loss Carryover. 

TurboTax asks for info from your 2023 return to help calculate your 2024 carryover, but you could review your prior year returns Schedule D to verify how it carried over each year. 

Here's more info on How to Enter a Capital Gain or Loss and Capital Loss Carryover.

[binguyen]

Hi @MarilynG1 , thank you so much for your quick reply!  I have not been carry'ing over the loss since 2008 and so the Loss Carry Over info. on my 2023 Schedule D is not accurate. 

The TurboTax Step-by-Step inverview under Investment Income > Capital Loss Carryover mentions entering the info. specifically from 2023, is it correct to enter the information from the 2008 return and just ignore the mentioning of 2023?

[VolvoGirl]

No.  You should have carried it over to each year.  You have to report the carryover every year until it's used up.  You can't skip a year.  Even if you don't report it on your return you have to reduce it by the 3,000 (1,500 MFS) when you carry it over to next year.  You can't choose when to use it.

Why isn’t Schedule D accurate?  

Are you sure it wasn’t used on your returns since 2008?   Did you use Turbo Tax all the years?  It would have automatically carried over.  Maybe you didn’t notice.  

You first offset the loss against any gains you have each year which will use more of it up.  Then after applying the loss to the current gains if you still have a loss you can take a max loss of 3,000 (1,500 MFS)per year.

BUT  If you have a negative AGI or negative taxable income it will show up on 1040  BUT it won't reduce the carryover to the next year.

[binguyen]

Thank you so much for the info. @VolvoGirl.  I have been using TurboTax since 2005. 

I had a large capital loss in 2008 (about $60K) but when I checked my 2012 return Schedule D, I didn't see an entry on either line 6 (Short-term capital loss carryover) or line 14 (Long-term capitial loss carryover).  That's why I thought that the Carryover has not applied.  May be I'm not checking it correctly?  If the max. carryover is $3K a year, would there be a figure on either one of these lines since the $60K would not have been exhausted by 2012? 

I'm hoping that TurboTax has been doing it right and I'm just not spot checking correctly.

[VolvoGirl · Accepted solution]

Well you have to check each year from the beginning 2008.   Maybe you had a lot of gains that used up the carryover.  Did you save the pdf each year with all the worksheets?

Schedule D doesn't actually show the carryover amount. To find your  Capital Loss Carryover amount  you need to look at your  return schedule D page 2.  Line 16 will be your total loss and line 21 should be a max loss of 3,000.  The difference between line 16 and 21 is the carryover loss for next year.

There is also a Carryover Worksheet showing the carryover from the prior year and the current amounts.  Then there is also the Capital Loss Carry Forward worksheet showing the amount transferring over to next year.

In the Online version you have to save your return with all the worksheet as a pdf file to your computer to see Schedule D and the Capital Loss Carry Over and Carry Forward worksheets.

In the Desktop program you can go to Forms and find it in the list in the left column.

[binguyen]

Thank you @VolvoGirl, your "Maybe you had a lot of gains that used up the carryover." clarification has cleared everything up.

The $3K limit only applies to Ordinary Income.  There is no such limit for applying the Capital Loss Carryover to future Capital Gains.  I've reviewed the Schedule D's and confirmed that TurboTax has fully offset the Capital Loss Carryover against the Capital Gain on the subsequent years.

[Nina55]

Volvo Girl,
Thanks for clarifying that I am doing the correct thing with regard to Capital Loss Carryforward on the Federal return.  Turbo Tax handles it automatically since I used TT last year too.
But when it comes to my state's (Massachusetts) tax form, it looks like I have to enter the value manually.  I found it on 2023 MA Schedule D Line 23.
Can you confirm?  Thanks again.

Nina

[IsabellaG]

Yes, you would need to enter any available capital losses in the program (not directly on the form). Massachusetts handles capital losses differently from the federal return. 

1. You will see a screen in the Massachusetts return : Tell Us About Any Prior Year Carryover Losses. Check off where the carryover loss is reported on your 2023 MA return, either Schedule B, line 23 or  Schedule D, line 23.
2. On Prior Short-Term Unused Losses, enter the amount as a negative number