How does TT handle the $3K capital loss limit over each tax year?

[cramanitax]

Hello community.  I have been using TT for doing my 78-year old mother's taxes since 2019.  Each year she's had capital short-term losses over $20K each year in her investments.  This has allowed her to take the $3K deduction allowed annually on her taxes.  QUESTION: Is there any way to get a deduction beyond the $3K annually for prior years since she's had more than $3K in losses each year?  

[tagteam]

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@cramanitax wrote:

QUESTION: Is there any way to get a deduction beyond the $3K annually for prior years since she's had more than $3K in losses each year?  

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No.

See https://www.irs.gov/taxtopics/tc409

Limit on the Deduction and Carryover of Losses

If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss shown on line 16 of Schedule D (Form 1040). Claim the loss on line 7 of your Form 1040 or Form 1040-SR. If your net capital loss is more than this limit, you can carry the loss forward to later years. You may use the Capital Loss Carryover Worksheet found in Publication 550, Investment Income and Expenses or in the Instructions for Schedule D (Form 1040)PDF to figure the amount you can carry forward.

[NCperson]

the only other way is to have capital gains, which would then be netted against the capital loss carryforward...otherwise, the answer is "no".  

The IRS is please to be your shared partner when you have a net gains and takes its tax accordingly, but the IRS is not willing to be your shared partner when there is a net loss; as you have experienced when there is a net loss, only the first $3000 each year is deductible against other income.  The IRS is not willing to be a shared partner beyond that.  

[cramanitax]

Thank you.  Since I upload the previous TT file to work on the current tax year, where is the section that walks through carrying the losses forward?  I think I may have seen it but cannot find it.

[tagteam · Accepted solution]

TurboTax will automatically enter your capital loss carryovers provided you transfer your return from the prior year (see the screenshot below).