Do not need carryover capital loss this year can I save for next year?

[MargaretL · Accepted solution]

No, you cannot pick and choose which year the carryover loss will apply; the IRS does not allow it, unfortunately. You must use whatever capital loss carryover is available to you and apply to the current year, the unused amount is then carried to future years.  If you skip a year, you permanently forfeit the carryover.

[dmnttax]

Thanks for answering that question on Capital loss carry over. I can see that you can not if you are filing this year and want to skip. Now, what if I am not required to file tax because I only had $5000 capital gain and no other income, so I am below threshold to be required to file? The point is if I file, then my carryover is reduced by $5000, and I have no benefit from this since my income is still -3000 and I wasted $5000 of my carryover this year to offset something I didn't have to report! My question is under the above circumstances, can I opt and not file taxes and use the full carryover to next year instead of 'carryover-$5000' that will result (for the next year carryover) if I did it this year?

[jbbafl]

Even though you don't think you need to file taxes with the IRS because you do not meet the requirement in terms of income, you still need to file  in order to maintain your carryover privileges. That means, for example, if you have an income of only $7,000 and you have losses or gains, and your income  still remains under the requirement for filing taxes, you still have to file...to report your gains and/or losses. If you skip a year, the IRS, as policy, will not let you carryover losses. You are always required to file taxes if you have any sort of income/gain or loss as long as it is being reported to the IRS by another entity. Entities such as a brokerage firms and money management firms, for example, will report your gains or losses to the IRS.  So, the reason for filing taxes is twofold, 1. to maintain your carryover privileges in case you need to use them, and 2. It is required by law.  Typically, the IRS may not care much if you only have losses, but they may take notice if you have gains that exceed your filing threshold and you don't report them.   Hope this helps.

[ssssruch]

I have a capital loss on my rental property that carries over to this year.  last year i did not claim any days of personal use.  This year if i claimed i used it for 15 days or more how does that impact me.  Do i still get to carry over the prior years losses and this years losses or do i loose all carry over losses because i used it for 15 plus days of personal use

[npierson7]

You won't lose your carry over losses. However, you will have to prorate your expenses if you use your rental property for personal use more that 14 days in a year. 

You can learn more about that here:

Renting Residential and Vacation Property

[fredclarkjr]

Ok so in this scenario the filer is not wanting to file a schedule D to carryover losses because he does not want to file taxes at all. In my situation I am filing, but I have no capital gains to report, do I have to file the schedule D in order to preserve my carryover loss for future years?

[ShirlynW]

No.  You do not have to file the schedule D in order to preserve your carryover loss for future years. IRS Pub 550, page 66 states, "Capital loss carryover can be used in later years until it is completely used up." Also, IRS Pub 550, page 23 list an exemption for filing Schedule D:

"Exceptions to filing Form 8949 and Schedule D (Form 1040). There are certain situations where you may not have to file Form 8949 and/or Schedule D (Form 1040). Exception 1. You do not have to file Form 8949 or Schedule D (Form 1040) if you have no capital losses and your only capital gains are capital gain distributions from Form(s) 1099-DIV, box 2a. (If any Form(s) 1099-DIV you receive have an amount in box 2b (unrecaptured section 1250 gain), box 2c (section 1202 gain), or box 2d (collectibles (28%) gain), you do not qualify for this exception.) If you qualify for this exception, report your capital gain distributions directly on line 7 of Form 1040 or 1040-SR (and check the box). Also, use the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040-SR instructions to figure your tax."

Even if exceptions apply for filing Schedule D, I strongly suggest keeping records of your loss carryovers.

[VolvoGirl]

@fredclarkjr    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.

This is from the IRS Pub 550 page 66 last column....

"When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year. "

Here is pub 550…  http://www.irs.gov/pub/irs-pdf/p550.pdf

If you have a negative AGI or negative taxable income it will show up on 1040  BUT it won't reduce the carryover to the next year.

[nbl17]

Thanks for re-activating this thread as I just had some questions regarding this subject.

In Year 1, I had $6,000 in losses, used $3,000 and carried over $3,000.

In Year 2, I had $3,800 in losses, used $3,000 and carried over $800 (Cumulative carryover $3,800).

In Year 3, another $9,000 in losses, used $3,000, carried over $6,000 (Cumulative carryover $9,800).

In Year 4, I had $8,000 in gains.  Can I offset all $8,000 and still have $1,800 to carryover to year 5?

Thanks!