Carryover losses.

[Ho7bl4ck]

I have a significant amount of losses from crypto from last year. How and what can I use the carryforward losses for? I believe it can only be $3000 a year, but what and how do I apply that in the coming years? Can it offset income, short term gains, long term gains, etc?

[Anonymous_]

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

Capital losses first offset capital gains and then up to $3,000 of any remaining capital losses (per tax year) can be used to offset all other types of income.

[Anonymous]

Hello Ho7bl4ck,

Thank you for joining us today. As to your question, any carryforward losses will offset capital gains first (both short- and long-term) and then ordinary income up to $3,000. You can carryforward capital losses indefiniately (until you use them up).

I hope that helps.

[Mike9241]

Short-term Crypto losses will first offset other net short-term gains. 

Long-term Crypto losses will first offset other net long-term gains.

If you end up with net short-term losses and no net long-term losses, they will be applied to any remaining net long-term gains with any excess up to $3,000 used to offset other income with any excess being carried over.

if you end up with net long-term losses and no net short-term losses, they will be applied to any remaining net short-term gains with any excess up to $3,000 used to offset other income with any excess being carried over.

if you end up with both short and long-term capital losses, short-term is used first for the $3000 deduction