Short and Long Term Capital Losses from previous years. how much can offset *gains from **this** year*

[paul-j-heckman]

Hi All

From prior years, 2020 and 2022, i have capital losses that were never applied as offsetting.  i believe it's called "carryover" when they're not used.  It's about 50K.  I have significantly *less* SHORT term capital gains only going this year, 2023, i think about 25K USD at this point.  

I can use all of those prior years 50K losses to zero out this 25K gain from this year for capital gains tax elimination purposes, correct?  thanks!

[Critter-3 · Accepted solution]

If you have losses that could not be used because your income is too low then the excess is computed and carried forward.  If you log into the same account each year the unused carried forward loss will be forwarded it automatically.  Or you can look at the 2022 return for the loss carryover worksheet for the amount to use on the 2023 return.  

[Hal_Al]

Q. Short and Long Term Capital Losses from previous years; how much can offset gains from this year?

A. Simple answer: all of it.  That is, all of it that carried forward from the previous years (because it did not get used in the previous years). 

Q. I can use all of those prior years 50K losses to zero out this 25K gain from this year for capital gains tax elimination purposes, correct?

A. Correct.  With a $50K carry over applied to $25K gains, you'll most likely have a  $22K  carry over to 2024.  $25K  of the $50K will be used against the $25K 2023 gains and $3K (the maximum allowed) will be used against your other 2023 income. If you did not have enough "other income" to offset, then more of the $25K excess will be carried forward.  

[paul-j-heckman]

thank you so much!  🙂

super helpful.  really.  thank you