Is the Capital Loss Carryover calculation not working correctly?

[CityRoamer]

I have over $10K of carryover losses from 2019.  I am trying to carryover my max allowed amount of losses ($1500 for married filing separate).  When I enter the correct values from my 2019 tax return, TurboTax is calculating my entire $10K towards this year's return, which is against IRS rules.  This is causing my estimated federal refund to be higher than it probably really is.  Has anyone else run into this issue?

[Mike9241]

that $1500 is the married filing separate limit when you have a net capital loss for 2020.  the $10K carryover from 2019 is used to offset the net capital gains for 2020. then if you have a net Capital Loss you can deduct the $1500.  

[CityRoamer]

I think I realize the mistake I was making, but it would be good to have someone confirm this for me:

My short term capital gains this year are over $10K.  The carryover loss rule says that only $1500 (for married filing separate) of carryover can be deducted towards ORDINARY income, but towards this year's short term capital gains, I can throw the entire amount of carryover loss ($10K) towards this year's gains, correct?

I was thinking the $1500 limit was for capital gains as well, but it is for normal income, wages, etc.

[Hal_Al · Accepted solution]

Yes,  you can throw the entire amount of carryover loss ($10K) towards this year's gains, even short term gains. 

Even though short term gains are taxed as "ordinary income", they are not treated as ordinary income for purposes of the carry over rules.