If I have Long Term Cap Gains that are in the 0% tax bracket and also have Capital Loss for the year, will the loss be used to offset the gain even though it's not taxed?

[UserID123]

I had a Long Term Capital Gain in the 0% tax bracket, but I also had Capital Losses for the year. I am concerned that the losses will be used to offset the gain, even though the gain was not taxable.

[JulieS]

Yes, it will. 

Because of the flow of information on Form 8949 and Schedule D, all of your capital transactions are first divided into short or long term, covered and non-covered and then are netted together to arrive at your reportable gain or loss. 

After that the tax rate is figured for the long term capital gain. 

[UserID123]

Thank you for your thorough response!

Is there any way for me to carry all of the losses forward to another year so those losses aren't essentially wasted this year? Or is it simply that if you don't use it, you lose it?

[DawnC]

Your total capital gains for the year minus your total capital losses results in either a net capital gain or a net capital loss.

• Short term capital gains (gains on assets held one year or less) are taxed as ordinary income.
• Long term capital gains (gains on assets held more than one year) are taxed at a more favorable rate than ordinary income.
• Net losses are deductible, but only up to a maximum of $3,000 ($1,500 if married filing separately).   Any capital losses you couldn't deduct this year can be carried forward and deducted on future tax returns. This is called a capital loss carryover.   

[Mike9241]

the gain is taxable just at a 0% rate. and yes that gain must be netted with any capital losses you had.

[fanfare]

There is no gain if it is offset by a long term capital loss carryforward.

That happens first. See Schedule D.