My stock losses are not being counted on the PA state tax calculation. I can't find a way to change that. How can I make them appear?

[RobertB4444]

Pennsylvania has a lot of things that it treats differently than the federal government.  Make sure that the reason that it's not being taken into account isn't because of one of those rules.

Here is Pennsylvania's take on capital gains and losses.

If that isn't the problem then go back to where you entered the trades and go through your entries carefully to see that you didn't exclude them from state tax somehow.

And, lastly, go through your Pennsylvania tax return very carefully to make sure that they aren't treating the loss weirdly.

@dsross-comcast-n 

[dsross-comcast-n]

Thank you for your prompt response.  Mine are stock mutual funds held in a Schwab taxable account that was directly imported.  It is the same account that generated a gain last year, which was taxed in PA.  Done by a CPA.  There is a line on the PA-40 form for this entry.

The TT dialogue asked whether the gains are taxable or not.  I have tried answering it both ways.  I can't find any other place where I might correct this.  I have engaged with the TT first level support folks twice on this subject.  They have been unable to help me and only suggest that I pay them for tax advice.  I don't see a way to just ask for state tax advice, much less one question.  

Since the only thing that is taxable for me (retired) in PA is investment returns, it really is quite simple.  If I can't figure this out on TT, I will probably do it manually.

Thanks, Again.

[JamesG1]

This Pennsylvania Personal Income Tax Guide (page 3) states:

Pennsylvania does not allow an offset of loss against gain from one class of income to another......

So you are not allowed to offset wage income against a capital loss.

See also this TurboTax posting.

PA also does not allow you to offset other income with a capital loss. (Can't offset wages with capital loss).

So you report it, but if the total of all gains & losses is a negative, the loss does not effect your taxes.

@dsross-comcast-n 

[dsross-comcast-n]

I am not offsetting wage income.  I am retired and, as such, am only taxed on interest, dividend, capital gains distributions (line 3 on PA-40) and capital gains/losses (line 5 on PA-40).  Maybe I misunderstand your comment.

Thanks for the reply.

[GeorgeM777]

To follow-up on the comments @JamesG1, PA only allows capital losses to offset capital gains.  If you have a capital loss, such loss will be included on your PA-40, Pennsylvania Income Tax Return on line 5; however, when calculating PA taxable income, the instructions indicate that only positive amounts on lines 1 - 8 are to be added.  Any losses on lines 4, 5, or 6 on PA-40 are not included in calculating PA taxable income. 

@dsross-comcast-n 

[dsross-comcast-n]

Well, that sucks!  😉

I guess I should have gone beyond the description on the PA-40 form.  This year, I decided to do my own taxes after many years of having a CPA do them.  So, I am a recovering tax preparer?  Thanks, for this.

Dan

[ckiefer07]

I've been beating my head against the wall trying to understand this and think the problem may be a whole lot simpler (and dumber) than people think.   I've now checked both Turbotax, TaxAct, and a few other sources.   If you read the PA-40 Instructions for PA 40 Line 5,   there is a clear statement that you must "fill in the Oval" if the number is on Line 5 is negative.    Could it be THAT simple?   Form PA 40 on the PA Revenue website has the "oval" it clear as day.   I have yet to see any web preparer have that oval in their produced state eform.   I lost out on a $9K loss last year because of this and am really struggling to get anyone to own up to it.   I mean, it puts the right number in the form, but there must be something on the PA processing side that isn't smart enough to see it's a negative number.   That's my hunch anyway.   I just sent email into PA support so will post again if I get a response.

[email address removed]

[DianeW777]

You are correct.  Pennsylvania (PA) tax law is clear on losses in each class of income. In your case it's a capital loss on an investment. The oval itself only confirms the overall loss on the Line 5 class of income. And that the loss cannot be used to change your income or income tax. The e-file specifications are set by the IRS and the states which leads me to believe, the overall income or loss is key.

If there is a loss in one category or class of income such as the sale of investments reported on Schedule D, it cannot be used against any other class of income.  For example, a capital loss on an investment or stock sale, cannot offset wages or any other class of income.  The loss can only be used against gains in the same class of income to reduce or eliminate gains. Any loss that may remain is lost and can never be carried forward to another tax year. You should see the correct figures on the Schedule D, however on page one, that loss will not be used to reduce any other income class.

• Net gains or loss from the sale, exchange or disposition of Property

As far as last year, the law was the same.  Please update here if you have additional questions and we will help.