Carryover Loss

[Hal_Al]

Q. If there was no taxable income for 2020, does the full carryover loss go into 2021 ?  even though both 2019 and 2020 had no taxable income.

A.  Simple answer: yes.  But it depends on whether any of the allowable $3000 allowable capital loss was needed to get the taxable income to 0.  See above for details. 

[Tinka81]

yes , no taxable income before the allowable 3000 , income from a small amount of 1099G income after the $10,200 exclusion.  but does the 3000 still have to omitted on the1040 anyways even though it makes no difference?  so does it affect the full balance of the carryover  ?  or does the carrycver remains the same because there was no taxable income to reduce it? Thank you for your answer 🙂

[sts_66]

Follow up question to yours - why couldn't the standard deduction be used to offset the bit of interest income you had instead of cap loss carryovers being applied to it?

[Hal_Al]

@Tinka81  

Q. Does the 3000 still have to INCLUDED on the1040,  even though it makes no difference? 

A.  Yes. The  $3000 must show on line 7 of form 1040, even if it is not used in calculating your taxable income.

Q.  So does it affect the full balance of the carryover?  or does the carryover remains the same because there was no taxable income to reduce it? 

A.  The carry over remains the same because none of the capital loss was needed (used) to reduce taxable income.  For example, if you had a $20,000 capital loss from 2019,  $20,000 would carry over to 2021, even though $3000 was shown on line 7 of your 2020 form 1040.  The carry over calculations are not shown anywhere on your 2020 IRS forms.  It only shows on the TurboTax worksheet. 

@sts_66  The standard deduction IS first used to offset  income. Only if the standard deduction doesn't get your taxable income to zero; then some of  the $3000 capital loss is used. 

[Tinka81]

Thank you for your responses