I am carrying a long term capital loss of $170,000 but for the past 10 years our social sedurity and Vets income does not rise to the tax filing requirement. If I stop filing taxes do I loose the long term capital loss carryover?

[GeoffreyG · Accepted solution]

We are sorry to hear that you have incurred such a large capital loss(es) in the past.  The good news, though, is that a capital loss carryover has no expiration date (other than the life of the taxpayer); and no, you don't actually need to file a tax return every year with the IRS in order to keep the capital loss carryover, although you do need to "document" it.  We will explain below.

Not having to file a tax return doesn't mean that you still shouldn't at least prepare a tax return every year (though you need not file it), as a record of of your year-to-year long-term capital loss carryover.  Because of certain "quirks" let's say, having to do with IRS ordering rules in the way that deductions and your annual personal exemption are applied against your income (even when an individual falls below the IRS filing threshold), your capital loss may slowly be eaten away -- even if you don't use it.

In short, it's a complicated subject, as we researched before providing this answer.  To understand how long-term capital loss carryovers are treated for those who do not file an income tax return, or who have low taxable income, we respectfully direct you to some of our source materials.  The underlying concepts (and some useful examples) are discussed in depth on the following webpages:

http://fairmark.com/investment-taxation/capital-gain/capital-losses/capital-loss-with-little-or-no-i...

https://ttlc.intuit.com/questions/2566411-do-i-have-to-use-a-capital-loss-carryforward-even-if-i-hav...

Thank your for asking about this; and we hope that at some point in the future you'll be in position to fully utilize your long-term tax benefit.

[march4666]

Does the Long term Capital Loss Carry Forward end when someone dies?  My mother passed away in December and I have been carrying forward losses since my father passed. It will be included in the 2020 return I file, however, there is still a balance and I will need to file an estate tax return.  Is there anything I should do to preserve anything sheis entitled to- or her estate is entitled to receive?

[AmyC]

Unfortunately, the loss ends with the taxpayer. See Use It or Lose It: Income Tax Attributes at Death. I am so sorry for your loss.

[march4666]

Thank you.  I thought that was the case but wanted to verify.  Thank you for the peace of mind and closure!