Capital Gains/Loss Confusion

[wolfsis]

So I lost a good amount this year. My questions is why did turbo tax only harvest $800 instead of the whole $3000 maximum? Yes I am married, filing jointly - and I have a carry over of 24K for the next year. Thanks in advance for any info!

[ThomasM125]

 A net capital loss is allowed up to $3,000 per year. However, you did not state what kind of loss you have. A Net Operating Loss is allowed up to 80% of your taxable income. A Qualified Business Income loss is only allowed against business income. Are you sure you are dealing with a capital loss? Such a loss is normally generated from the sale of investments, like stocks and bonds. 

[wolfsis]

Thank you for your reply! Yes I am referring to a capital loss which I stated in the actual subject line, but not the message. Good to know for future posts, this is my first one. All stocks. 

[wolfsis]

Maybe I am not understanding this correctly, but here is what turbo tax is showing.

[KrisD15]

Capital gains LOSS can only be used (up to 3,000) to offset capital GAIN. 

If you only had 836 in gains, only 836 would be applied. 

[wolfsis]

Thanks for your reply. I made more than $800 overall but lost more than I made. This is a shot from one brokerage for 2023. I probably just need to stay out of these types of investments. 

[KrisD15]

Maybe next year will be better. 

Yes, if you made 836 overall, that is all the loss you can use. This will zero out the Capital Gain for this tax year and also mean there is no tax on the 836. 

Going forward you can make a profit (Capital gain) each year and offset up to 3,000 of the gain every year until the loss is used up. 

More about Capital Gain and Losses

[wolfsis]

Ok, starting to grasp it. I thought losses could also be harvested against other taxable income, such as  my self e employment income. I guess, not?!

Thanks again for the message!

[ThomasM125]

Net capital losses are allowable to offset net business income as well as other income reported on your form 1040, but only up a maximum of $3,000 per year. For example, if you sold a stock and had a loss of $7,000 and sold another one and had a gain of $3,000, you would have a net capital loss of $4,000 for the year. If you had net business income of 10,000 and that was your only other income, you could deduct $3,000 capital loss from the net business income and you would have $7,000 of taxable income for the year. Then, you would carry over the unused capital loss of $1,000 to the next year.

[wolfsis]

Thanks Thomas. That is what I thought. I’m just confused as to why Turbo Tax only harvested $800 and not 3000.  Both my husband and I are self employed and profited. I’m missing something…

[AmyC]

Look at your Schedule D part III summary to see the numbers and where the limit may be coming from. If you haven't paid, you will need to pay to see all of your forms. Paying now is smart before the price goes up.

To see your forms:

• In desktop, switch to Forms Mode. 
• For online, see How do I preview my TurboTax Online return before filing?

[wolfsis]

Thank you, Amy!

[Mike9241]

There is a capital loss carryforward worksheet that should provide more detail

[wolfsis]

Thanks to everyone for answering. I was able to find the error within the detailed sheet and now harvesting the whole 3k.