topic Capital Gain/Loss Offset in Get your taxes done using TurboTax

Capital Gain/Loss Offset

Shopper08 — Mon, 09 Mar 2026 11:41:57 GMT

I have LT capital gain for 2021, and wanted to know when do my LT capital loss have to be realized by in order to be able to use it to offset against my 2021 LT gain?

Re: Capital Gain/Loss Offset

Anonymous_ — Wed, 06 Apr 2022 19:27:31 GMT

@Shopper08 wrote:

I have LT capital gain for 2021, and wanted to know when do my LT capital loss have to be realized by in order to be able to use it to offset against my 2021 LT gain?

The losses have to be realized during the 2021 tax year.

Also, you can carryover losses from prior tax years to the 2021 tax year.

Re: Capital Gain/Loss Offset

RobertB4444 — Wed, 06 Apr 2022 19:29:36 GMT

Your loss and gain have to occur in the same year in order to offset each other. However, if you have a loss with no gain the portion greater than $3,000 is carried forward into the next year in order to offset future capital gains.

Re: Capital Gain/Loss Offset

Shopper08 — Wed, 06 Apr 2022 19:48:46 GMT

Specifically, I bought 50 units of Stock ABC on 3/1/2021 and bought another 30 units on 11/1/2021, all are currently at an unrealized loss. So I will not be able to use these losses against my LT gains when I file my 2021 taxes, even if I realized losses for these 50 initial units on 3/2/2022 (which is prior to my 2021 filing)? In other word, losses will have to be used either on the tax year they were realized or carry forward years?

Is there a duration for how long the losses can be carryover for? And do the losses accumulate, each year in the years where I have losses exceeding the allowable offset amount per year?

Re: Capital Gain/Loss Offset

Shopper08 — Wed, 06 Apr 2022 19:52:38 GMT

Does that mean if I have $5000 loss with no gain, would $3000 be used to offset ordinary income, and remainder $2000 would be carryforward?

Re: Capital Gain/Loss Offset

Anonymous_ — Wed, 06 Apr 2022 19:53:27 GMT

@Shopper08 wrote:

....losses will have to be used either on the tax year they were realized or carry forward years?

Yes, the losses will be realized (to offset gains) in the year they were incurred, in this case 2022.

Losses can be carried forward indefinitely (at least until you die). Losses offset gains and then up to $3,000 can be used against all other income, with the balance (if any) being carried forward.

Re: Capital Gain/Loss Offset

Shopper08 — Wed, 06 Apr 2022 20:14:33 GMT

@Anonymous_

Q: What happens in 2022 tax year if,

Scenario 1: I do not have any gains and have losses of $5000.

Scenario 2: If I do not have any gains and have losses of less than $3000.

Scenario 3: If I have gains of $3000 and loss of $2000.

Scenario 4: If I have gains of $1000 and loss of $3000?

Scenario 5: If I have gains of $1000 and loss of $4000.

Thanks.

Re: Capital Gain/Loss Offset

Anonymous_ — Wed, 06 Apr 2022 20:14:21 GMT

If you have only losses, then up to $3,000 of those losses can be used to offset other types of income. The losses in excess of $3,000 will be carried forward.

If you have gains and losses, the losses are first used to offset other gains.

Re: Capital Gain/Loss Offset

JohnB5677 — Wed, 06 Apr 2022 20:21:04 GMT

Scenario 1: I do not have any gains and have losses of $5000.

You will get a $3,000 deduction on the 2022 return and $2,000 will carryforward to 2023

Scenario 2: If I do not have any gains and have losses of less than $3000.

You will show a $3,000 deduction and no carryforward.

Scenario 3: If I have gains of $3000 and loss of $2000.

You will show a gain of $1,000.

Scenario 4: If I have gains of $1000 and loss of $3000?

You will show a loss of $2,000 and no carryforward

Scenario 5: Or gains of $1000 and loss of $4000.

You will show a loss of $3,000 and no carryforward.

Re: Capital Gain/Loss Offset

Shopper08 — Wed, 06 Apr 2022 20:33:48 GMT

@JohnB5677

Scenario 4 and 5: “will show a loss of $xxx…” is showing a loss the same as the loss being a deduction towards other income?

Below is to clarify my understanding for Scenario 5:

What if I have gains of $5000, loss of $8000?

What if I have gains of $5000 loss of $9000?

Re: Capital Gain/Loss Offset

Anonymous_ — Wed, 06 Apr 2022 20:36:32 GMT

@Shopper08 wrote:
What if I have gains of $5000, loss of $8000?

Then you have a net loss of $3,000 (that can be used against other income).

@Shopper08 wrote:
What if I have gains of $5000 loss of $9000?

Then you have a net loss of $4,000. $3,000 can be used against other income and the remaining $1,000 loss is carried forward.

Re: Capital Gain/Loss Offset

Anonymous_ — Wed, 06 Apr 2022 20:38:05 GMT

Re: Capital Gain/Loss Offset

crajarshi — Thu, 04 Aug 2022 07:36:39 GMT

very informative and great learning. I've a scenario where my salary is a combination of cash component and RSU and unfortunately my company does not let my brokerage deduct my RSU portion of the tax correctly. As a result I owe IRS till 07/31 70K as part of total compensation YTD.

I also recently traded some 2020/2021 RSU and lost 68K in total trade.

I'm trying to pay IRS this quarter, so should I pay 70k -68k =2K or entire 70K?

Re: Capital Gain/Loss Offset

Mike9241 — Thu, 04 Aug 2022 09:08:38 GMT

Restricted stock units (RSUs) are company shares granted to employees. RSUs that appear on Form W-2 indicate that shares have been delivered to you, which usually happens after vesting. income on w-2's is ordinary income

the loss you say you incurred in the sale of RSU's is a capital loss. at most only $3,000 of net capital losses for the year can be deducted against ordinary income

this is from an article in Forbes

According to the IRS rules for supplemental wage income, such as income from the vesting of restricted stock or RSUs, your company must withhold tax at a flat rate of 22%. (The rate jumps to 37% for income amounts in excess of $1 million during the calendar year.)

so some shares should have been sold to cover the required withholding. if not, this can result in a substantial penalty that the IRS can levy against the company.

so in figuring the tax you owe it would likely be your marginal tax bracket rate times the value of the stock to be added to your w-2 less whatever was withheld. we don't know your marginal tax bracket. It is not the effective tax rate that Turbotax shows on the filing instructions. The marginal tax bracket is shown in the tax history report. I don't know if all versions of Turbotax produce this report.

don't forget about state taxes if you are subject to them.

you should discuss with your company the ability to sell additional shares upon vesting so your full tax liability is covered.

Re: Capital Gain/Loss Offset

fanfare — Thu, 04 Aug 2022 11:48:46 GMT

"my company does not let my brokerage deduct my RSU portion of the tax correctly."

there are hundreds of posts on forum about RSU.

Understand how to report properly before filing.

1099-B must be adjusted when filing Schedule D.

otherwise you will overpay.

This has nothing to do with losses on other positions.

@crajarshi

Re: Capital Gain/Loss Offset

NCperson — Thu, 04 Aug 2022 10:23:48 GMT

@crajarshi to asnwer your specific quesztion, and what you state is a little confusing, so let me restate it.

You owe the IRS $70,000 from the 2021 tax year

You now have a loss of $68,000 on 2022 trades

1) you still have to pay the $70,000if

2) the $68,000 can be used to offset gains from sales in securities from 2022 forward. If you don't have any gains in a particular year, $3,000 of the loss can be applied to reduce your ordinary income.

Re: Capital Gain/Loss Offset

crajarshi — Thu, 04 Aug 2022 14:14:40 GMT

Thanks for the reply, I should have been more clear, my marginal tax bracket is 37%. The tax I say owe is for current year 2022 as my company only withholds 22% when the RSU vests every month. I'm trying to pay taxes so that the tax bill doesn't come with a penalty. The shares I've sold ( a portion of my RSU that was vested in 2020 and 2021) is also in 2022 July and August.

So considering that both events( less withholding of salary in 2022 as well as the capital loss from selling shares in 2022) happened in current year should I pay 2K ( difference between my withholding and capital loss) or 70K?

Re: Capital Gain/Loss Offset

NCperson — Thu, 04 Aug 2022 14:28:31 GMT

@crajarshi - i am still not following, but understand more.

1) I understand that you are in the 37% tax bracket, but the company is only withholding at 22%. this is ordinary income. So it appears, all things being equal, you should pay estimated taxes on 15% times the income reported on your W-2 that represent that vesting of the RSUs,

2) Once those RSU's vest, please do not refer to them as "RSUs", as that adds to the confusion. You simply own the shares. They are no longer RSUs.

3) So sounds like you sold some of the shares you were holding to raise the money to pay the tax in #1 above. but if you sold those securities at a loss, that loss can only be netted against gains on other asset sales. Alternatively, a maximum of $3,000 of losses can be netted against ordinary income, but since you are in a 37% tax bracket, that will only reduce the taxes you owe by ~$1,100 ($3,000 times 37%)

lastly, if your are in the 37% tax bracket, have a tax liability of $68,000, it is probaby in your best interest to have a tax account do your taxes. there is high likelihood that there are tax benefits you are missing that a tax accountant could quicky find to justify his cost. Example; if you 'screw up' the estimated taxes, the interest penalties could justify the cost of the accoutant!

Also, don't forget state taxes

Re: Capital Gain/Loss Offset

fanfare — Thu, 04 Aug 2022 15:57:18 GMT

"Alternatively, a maximum of $3,000 of losses can be netted against ordinary income, but since you are in a 37% tax bracket, that will only reduce the taxes you owe by ~$1,100 ($3,000 times 37%)"

@NCperson

You make it sound disappointing.

The higher your bracket, the more valuable a $3,000 deduction is.

Also this is not an alternative, if losses are not offset completely, you still get the (up to) $3,000 deduction.

@crajarshi

If you use TurboTax CD/Download (not TurboTax Online) you can do a TRIAL 2022 tax return and enter all these amounts. and get your future tax situation in detail. You still have to extrapolate what will happen for the rest of 2022 but so would a CPA have to do that.

Re: Capital Gain/Loss Offset

NCperson — Thu, 04 Aug 2022 17:19:04 GMT

@fanfare it IS disappointing!

If there were capital gains of at least $68,000 this year, then those same losses could reduce the tax burden by 23.8% times $68,000 or $16,184 (I am assuing the OP's income is high enough that the 20% capital gains rate comes into play).

but given the $3,000 annual limitation, that same $68,000 loss is ONLY going to reduce OPs taxes by $1,110 each year for 23 years. ($3,000 times .37% amd assuming no future capital gains). Discounting for the time value of money and it's worth even less than that,