Short Term Capital Gains Losses Carryover

[turbo651]

Hi,

For the year 2020, I had a collective short term capital gains loss of $10,000. As far as I understand it, only $3,000 can be deducted in a given year with the remainder ($7,000) carrying forward to subsequent years. I just wanted to confirm a couple of things, is there any special form that I need to fill out for the year 2020 and in 2021 if my short term capital gains theoretically are $8,000, would the $7,000 that was carried over be deducted from that total or would it still only be limited to $3,000 in a given calendar year? And on the flip side, if I incur additional short term capital gains losses in 2021, would that simply be added to the $7,000 that was carried over? And in either scenario, would there be any additional forms I would have to fill out in 2021 due to that losses that were carried over?

[DawnC · Accepted solution]

The $7K capital loss carryover amount is shown on Schedule D, specifically lines 16 and 21.   If the line 16 loss amount is greater than the number shown on line 21 (pretend they're both positive numbers), you should be getting a capital loss carryover on this year's return.   If you transferred data from last year's TurboTax return, your carryovers are already accounted for.

• Carryover losses on your investments are first used to offset the current year capital gains if any.
• You can deduct up to $3,000 in capital losses ($1,500 if you're married filing separately).
• Losses beyond that amount can be deducted on future returns as a capital loss carryover until the loss is all used up.

For example, if your net capital loss in 2018 was $7,000 and you're filing as single, if you have no capital gains for 2019 and 2020, you can deduct $3,000 of the loss on your 2018 return, $3,000 on your 2019 return, and the remaining $1,000 on your 2020 return.

Unfortunately, you can't pick and choose which future tax year(s) you wish to apply your carryover to. Carryovers from this year's return must be applied to next year's return.   If you transferred last year's return over, we automatically include the carryovers. However, it's always a good idea to keep a written record of your expected carryover amounts to compare against your return.

Related Information:

• Where do I enter a capital gain or loss?
• How do I enter my capital loss carryover?
• How can I tell if I'm entitled to a capital loss carryover from last year's return?