topic California State tax - Capital Gains not Offset by Capital Loss in State tax filing

California State tax - Capital Gains not Offset by Capital Loss

egregory — Wed, 11 Feb 2026 04:39:41 GMT

In TurboTax 2023 I have imported my brokerage information. I have a large long term capital loss carrying over.

Last year I had a short term capital gain which was much smaller than the long term capital loss.

The Federal tax amount on my return (as expected) remained unchanged, with the loss offsetting the gains.

On the State tax amount, however, it seems to be ignoring any capital loss carryover so I am being taxed on the gains.

Should not the long term capital loss be in effect on the State Taxes as well as the Federal? ie. There should be no taxes as the long term capital loss should offset the gains at both the State and Federal level.

The state is California.

Re: California State tax - Capital Gains not Offset by Capital Loss

MonikaK1 — Mon, 05 Feb 2024 23:02:19 GMT

Yes, you should have capital loss carryover for California if you have it on your Federal return.

If you were a nonresident of California for any years that generated a portion of the loss, then you will have to recalculate your California capital loss carryforward.

Line 6 – 2018 California Capital Loss Carryover

If you were a resident of California for all prior years, enter your California capital loss carryover from 2018. However, if you were a nonresident of California during any taxable year that generated a portion of your 2018 capital loss carryover, recalculate your 2018 capital loss carryover as if you resided in California for all prior years. Get FTB Pub. 1100, Taxation of Nonresidents and Individuals Who Change Residency, for more information. Enter your California capital loss carryover amount from 2018 on line 6.(From the 2019 California Schedule D Instructions)

if you used TurboTax for 2022, look for your "California Capital Loss Carryover Worksheet". Line 8 shows the value to carry forward to 2018. You should be able to manually fill this in.

You also need to have California added to your return in progress in order for the carryover to populate.

See here for another discussion of this issue.

Re: California State tax - Capital Gains not Offset by Capital Loss

egregory — Tue, 06 Feb 2024 00:13:56 GMT

Ok, it looks like there may be an issue with TurboTax 2023 correctly carrying over my capital losses from TT 2022. Looking at my 2022 form I can see a proper amount in line 6 of my Form D (540), but in 2023 it is blank.

Thanks!

I think I'll be able to figure it out with that info!

Re: California State tax - Capital Gains not Offset by Capital Loss

xiaoyaozi — Fri, 08 Mar 2024 01:44:49 GMT

I'm facing the exact same issue! @egregory did you find a workaround? This is definitely a bug that will affect a lot of people, @MonikaK1 Can Turbotax get this fixed as soon as possible? I don't think I'm able to use Turbotax to file if this issue remains.. I'll lost more than $1000 refund with this bug.

Re: California State tax - Capital Gains not Offset by Capital Loss

xiaoyaozi — Fri, 08 Mar 2024 17:31:03 GMT

It turned out the offset is correctly applied after I started the state tax preparation, so the end result is okay.