topic Must I use a tax loss deduction in year incurred or can I defer till next year in Investors & landlords

Must I use a tax loss deduction in year incurred or can I defer till next year

arnnadf-gmail-co — Sat, 26 Dec 2020 04:15:43 GMT

I have a capital loss[stock] this year but low tax rate. Will be higher in 2021 and don't want to use loss this year. Can I do this?

Re: Must I use a tax loss deduction in year incurred or can I defer till next year

macuser_22 — Sat, 26 Dec 2020 04:26:09 GMT

No. Capital losses must be claimed each year and can reduce ordinary income by $3000. The remainder (if any) is carried to the next year. Failing to claim the loss in any year prohibits the remainder to be carried forward and it is lost.

Re: Must I use a tax loss deduction in year incurred or can I defer till next year

VolvoGirl — Sat, 26 Dec 2020 04:52:10 GMT

But If you have a negative AGI or negative taxable income it will show up on 1040 BUT it won't reduce the carryover to the next year.

Re: Must I use a tax loss deduction in year incurred or can I defer till next year

macuser_22 — Sat, 26 Dec 2020 05:05:30 GMT

That is correct. It does not mean that the carryover is always reduced by $3,000 if you did not have that much taxable income to reduce, but it still must be reported each year. The carry-over amount can only come from the carry forward amount of the prior years schedule D. If no prior years return was filed with a schedule D then there is a zero amount to carry forward.