topic The simple answer is no. But, you must report the capita... in Get your taxes done using TurboTax

Do I have to use a capital loss carryforward even if I have no taxable income?

shadow4-14-92 — Fri, 07 Jun 2019 21:56:09 GMT

My income was negative using the capital loss carry forward. I would rather save it for a year in which I have taxable income. Is it possible for me to do that?

The simple answer is no. But, you must report the capita...

Hal_Al — Wed, 04 Aug 2021 19:36:15 GMT

The simple answer is no. But, you must report the capital loss carry forward on your current year return. You are not allowed to postpone using it or saving it for a more advantageous time.

The actual is answer is more complex. Although you have to report it, it may not all get wasted (used). The best thing to do is prepare a tax return (even if you aren't required to file) to accurately calculate the carry over to the next year.

The tax law says you have to use a capital loss before you're allowed to use a personal exemption If the personal exemption would completely eliminate your income, you would rather use the personal exemption first. That way, the capital loss would carry over to the next year. Instead, you're forced to use the capital loss, and there's no carryover for unused personal exemptions. Don't ask me why the law works this way: that's just the way it is.

An example may help explain it:
You have a $12K capital loss carry forward from the previous year. Your AGI is $4000, including the $3000 loss on line 13. Meaning your income was $7000 before deducting the loss,
  $7000
-   6100 Standard deduction
=    900  Taxable income before exemptions and capital losses are deducted

  $3000 Capital loss shown on line 13
-     900 Used to reduce pre-exemption taxable income to 0
=   2100 of that $3K capital loss will be carried to 2014. That's in addition to the $9K (12,000-3,000), so $11,100 will be carried forward. TurboTax can handle this calculation and will prepare a carry forward worksheet to show it.

Like I said, it's complicated. It's the government.

Edit: Starting with tax year 2018, there are no more personal exemptions. Personal exemptions were replaced. by larger standard deductions

Complicated? No. The government wants you to use up your...

maineransom — Fri, 07 Jun 2019 21:56:12 GMT

Complicated? No. The government wants you to use up your loss carry forward against nothing instead of allowing you to carry it forward to use against a future gain. Not fair. Not right.

I totally agree. This is unfair and wrong. If my taxable...

lionfish — Fri, 07 Jun 2019 21:56:14 GMT

I totally agree. This is unfair and wrong. If my taxable income in 2014 is 0 and I had $3500 of capital loss, how can I use Turbo Tax to save the entire capital loss ($3,500) for the next year?

"If my taxable income in 2014 is 0" How did your taxable...

Hal_Al — Fri, 07 Jun 2019 21:56:15 GMT

"If my taxable income in 2014 is 0"
How did your taxable income get to zero? Was it because you used the capital loss? You cannot force TT to " save the entire capital loss". It will correctly calculate how much of it you are allowed to "save" .

My income was $645 in 2014 (from dividends). Personal exe...

lionfish — Fri, 07 Jun 2019 21:56:18 GMT

My income was $645 in 2014 (from dividends). Personal exemption and standard deduction (all together $10,150) would help eliminate my taxable income to 0 (actually negative). In this case, am I eligible for carry forward of the entire capital loss ($3,500) to the next year? Thank you!

Yes. You don't need to go thru the exercise of preparing...

Hal_Al — Wed, 04 Aug 2021 19:42:59 GMT

Yes, but it's because your income is reduce to zero by you standard deduction ($6100), not combination of your personal exemption and standard deduction (all together $10,150)

You don't need to go thru the exercise of preparing a tax return. The entire $3500 is carried forward. But, you should prepare some documentation, such as the calculations above

This was a very useful answer. But now that personal exem...

noelroy — Fri, 07 Jun 2019 21:56:23 GMT

This was a very useful answer. But now that personal exemptions have been removed from the tax code, does the answer still apply? In other words, if there is no personal exemption to use, do I still have to use the carryover loss?

Re: This was a very useful answer. But now that personal exem...

HitEmTrue — Wed, 04 Aug 2021 18:27:27 GMT

No, the answer does not apply for tax years 2018 and after.

Re: This was a very useful answer. But now that personal exem...

Hal_Al — Wed, 04 Aug 2021 19:53:38 GMT

The answer is still the same. Only the personal exemptions have been eliminated. With the larger standard deductions, it's even more likely that low income people will be able to carry forward the entire capital loss.

Modifying the example above, for the current law:

You have a $12K capital loss carry forward from the previous year. Your AGI is $4000, including the $3000 loss on line 7 (2020 form 1040) . Meaning your income was $7000 before deducting the loss,
$7000
- $12,400 Standard deduction
= 0 Taxable income before capital losses are deducted
The entire $12,000 capital loss can be carried forward.

Re: This was a very useful answer. But now that personal exem...

HitEmTrue — Wed, 04 Aug 2021 21:01:47 GMT

Fair enough...I was only addressing the exemption part of the equation.

Re: This was a very useful answer. But now that personal exem...

hebroots — Thu, 03 Feb 2022 18:49:39 GMT

This whole situation has got me very confused. I had a large capital loss in 2015. For a few years I was able to write-off $3000/yr loss. Also my total amount of carryover would decrease that same amount. Then for some reason the tax forms changed to where I would still get the $3000 writeoff, but the amount to be carried over would not decrease. This has been the only reason for me to file to keep track of my carryover, I do not get a refund nor pay anything. So does this carryover ever go away? I do not need the deduction, the whole thing is crazy.

Just wondering if that situation of having an unfinished carryover will alert the IRS if I did not file? It does nothing but make more paperwork.

Re: This was a very useful answer. But now that personal exem...

Hal_Al — Sun, 18 Sep 2022 12:49:45 GMT

@hebroots "Then for some reason the tax forms changed to where I would still get the $3000 write off, but the amount to be carried over would not decrease. "

It may appear that way. -$3000 is showing on line 7 of form 1040. But because your income is so low (and no tax is calculated), the -3000 is not needed to get you to 0 tax. So, that $3000 also carries forward. This is explained above.

Re: This was a very useful answer. But now that personal exem...

hebroots — Thu, 03 Feb 2022 21:55:46 GMT

I can understand where some would want to hold on to the ability to take a $3000 writeoff but I see no scenario where that would be necessary. I am done with investments. So I am thinking that this year if I prepare a return with the numbers, and not even mention the carryover, but not file it (at that point it would be a "frivolous return"), it would show I neither pay tax or get a refund and have no carryover. This could go on indefinitely otherwise.

Re: This was a very useful answer. But now that personal exem...

Hal_Al — Sun, 18 Sep 2022 12:50:44 GMT

Yes, yours is a common situation. The carryover is essentially loss (goes unused) for lack of other income. But the balance does continue to carry over. The ultimate is: the entire carryover is wiped when you die. Even on your final return, for the year of your death, your net capital loss deduction is limited to $3000. Anything in excess is simply loss.

Re: This was a very useful answer. But now that personal exem...

hebroots — Thu, 03 Feb 2022 22:31:49 GMT

Not real happy about your answer but I thank you for it, anyway. Have a good day.

capital gains carryover filing in year no income received

5Swallow5 — Mon, 18 Apr 2022 21:53:03 GMT

Hello,

Can you please confirm that a capital gains carryover will continue without me filing a tax return (if I have no income to report)?

And, in 5 year's time, if I do again have an income, then I would file a return, and add schedule D to include the capital loss carryover that remained to be used (and was not lost during the time I did not file a tax return).

Re: capital gains carryover filing in year no income received

Hal_Al — Mon, 18 Apr 2022 22:38:15 GMT

Q. Can you please confirm that a capital gains carryover will continue without me filing a tax return (if I have no income to report)?

A. Simple answer: Yes.

But that assumes that you had no income to report, not just insufficient income. Using an example in 2022, you sell some stock for a $1000 gain. That is not enough income for you to have to file a tax return. But that $1000 gain would reduce your capital loss carryover by $1000, even though you didn't actually file a tax return.

Re: This was a very useful answer. But now that personal exem...

supamest — Sat, 30 Apr 2022 06:30:38 GMT

What about a situation where you have long term capital gains taxed at 0%. Do you have to use the loss carryover against those gains that are not subject to any taxes to begin with?

Re: This was a very useful answer. But now that personal exem...

Anonymous_ — Sat, 30 Apr 2022 13:50:21 GMT

@supamest wrote:

Do you have to use the loss carryover against those gains that are not subject to any taxes to begin with?

Yes, the loss would still be used to offset any gain.