Tax Loss Harvesting

[Sirtaxedalot]

after using long term losses against short term gains, i still have a remaining loss of -$13000 for 2023.  Can i use this remaining loss to offset interest income and dividend income completely, only up to $3000?

thanks

[VolvoGirl]

Yes it will offset other income.  If you have a net loss for the year you can only deduct 3,000 (1,500 MFS) max on your tax return.  The rest you have to carryover to next year.  You have to report the carryover every year until it's used up.  You can't skip a year.

[Sirtaxedalot]

thank you for the excellent speedy reply! just so i am clear, is the $3000 max AFTER considering all interest income and dividends, or before?  If for example, i have $15000 in interest income, can i reduce it down to $2000 or only down to $12000?  thanks again

[VolvoGirl]

No you can only reduce all the other income by 3,000.  Interest and dividends are part of other income.  So after all income.   The total losses can only net against gains, not interest or dividends.  

[rjs]

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@Sirtaxedalot wrote:

If for example, i have $15000 in interest income, can i reduce it down to $2000 or only down to $12000?  thanks again

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Your total ordinary income will be reduced by $3,000. The $3,000 is not specifically applied to any particular type of income. It reduces your total income. If you want to think of it as specifically reducing your $15,000 of interest income, subtracting $3,000 would reduce it to $12,000. What you will see on your Form 1040 is a net capital loss of $3,000 included in the sum of your income. The remaining capital loss is carried over to future years.

You have no choice about how capital losses are used. TurboTax will automatically do the calculations according to the tax law, and there is only one way to do it. There are no options.