My child is 18 and going to college, and we still claim him as a dependent. We sold some of his investments in 2022 and he took a loss. Can I claim his investment loss on our taxes since he won't be filing taxes? If so do I indicate anywhere that it is his loss?
You cannot claim your son's investment loss on your tax return. The loss is his, not yours.
Even if he is not otherwise required to file, he should file a tax return showing the investment sales and the loss. He can then carry the capital loss forward from year to year. When he eventually has some income, the capital loss carryover will be used to offset some of his income.
When he files his tax return, make sure he checks the box that says that someone can claim him as a dependent.
If the child's only income is interest and dividends, the parents can elect to report it on the parents tax return. This does not apply to capital losses, however, so your child needs to file their own return.
As others have said, you can not claim his capital losses on your tax return.
I'm of the opinion that he does not need to actually file a tax return in order to carry forward the losses. But what he does need to do if accurately calculate the carry forward amount, which usually means at least preparing a tax return. If he has absolutely no other income, then the entire loss carries forward.
Another possible reason for him filing is the 1099-B issued by the broker. If it's large enough and does not show the cost basis, an IRS inquiry could be triggered.
Do I have to use a capital loss carry over carry forward?
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. A dependent does not get a full ($12,950) standard deduction.