How to show Interest and dividend income from standard deduction and not from capitol losses

[misterboatman]

Hello,

I have income from interest and dividends.  I also have capitol loss carry over.  I would like to use my standard deduction to offset my income from interest and dividends, and not my capitol loss (as my standard deduction is mostly unused). 

Question 1: Is that OK?

Question 2:  How do I show that on the 1040? 

(Line 9 wants to use my capitol loss to offset my income from the interest and dividends.  Which comes before line 15, where the standard deduction will offset my income from the interest and dividends.)

Thank you very much

[tagteam]

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@misterboatman wrote:

Question 1: Is that OK?

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No. You have to use up to $3,000 of your net capital loss every tax year and you cannot select the type of income to offset with that net loss.

[VolvoGirl]

Don't know what you think you are trying to accomplish or you are losing.   Both the  Capital Loss Carryover on line 7 and the Standard Deduction line 12 are subtracted from your total income on line 9 (actually from line 10).   Why does it matter?  You get the benefit of both.  

Are you trying to save the Capital Loss Carryover for the future?   

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.

But there is this, I think this is what you want to happen.......
If you have a negative AGI or negative taxable income the Capital Loss Carryover will show up on 1040 BUT it won't reduce the carryover to the 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 the Capital Loss Carry Over and Carry Forward worksheets.

[Hal_Al]

Q.  I would like to use my standard deduction to offset my income from interest and dividends, and not my capitol loss (as my standard deduction is mostly unused).  Is that OK?

A. Yes and No. Simple (and official) answer: No.  As others have said, you must enter the full capital loss carry forward. TurboTax (TT) will enter it (up to $3000) on line 7 of form 1040.  But if your standard deduction is "mostly unused", TT (and the IRS rules)  will effectively adjust  (reduce) the amount of capital loss used to calculate taxable income.  

Q. How do I show that on the 1040? 

A. It doesn't show on  form 1040, because reducing income is not technically what happens.  Instead, it is reflected in the amount of capital loss carry forward to the next year. All of this happens automatically in TT. You don't do anything, but enter your info normally. 

Asking your question differently:

Q. Do I have to use a capital loss carry over?

Basically, you are allowed to use your standard or itemized deductions to reduce your taxable income before having to use your capital loss. Technically, if your standard (or itemized) deduction is greater than your AGI, without  the capital loss, then all your capital loss is carried forward. TurboTax can handle it and will prepare a "Capital loss carry forward worksheet" to show the how much of your capital loss that will be carried forward to 2024.