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New Member

Do I have to use a capital loss carryforward even if I have no taxable income?

My income was negative using the capital loss carry forward.  I would rather save it for a year in which I have taxable income.  Is it possible for me to do that?
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Level 15

Do I have to use a capital loss carryforward even if I have no taxable income?

The simple answer is no.  But, you must report the capital loss carry forward on your current year return. You are not allowed to postpone using it or saving it for a more advantageous time.

The actual is answer is more complex. Although you have to report it, it may not all get wasted (used). The best thing to do is prepare a tax return (even if you aren't required to file) to accurately calculate the carry over to the next year.

The tax law says you have to use a capital loss before you're allowed to use a personal exemption. If the personal exemption would completely eliminate your income, you would rather use the personal exemption first. That way, the capital loss would carry over to the next year. Instead, you're forced to use the capital loss, and there's no carryover for unused personal exemptions. Don't ask me why the law works this way: that's just the way it is. 

An example may help explain it:
You have a $12K capital loss carry forward from the previous year. Your AGI is $4000, including the $3000 loss on line 13. Meaning your income was $7000 before deducting the loss,
  $7000
-   6100 Standard deduction
=    900  Taxable income before exemptions and capital losses are deducted

  $3000 Capital loss shown on line 13
-     900 Used to reduce pre-exemption taxable income to 0
=   2100 of that $3K capital loss will be carried to 2014.  That's in addition to the $9K (12,000-3,000), so $11,100 will be carried forward. TurboTax can handle this calculation and will prepare a carry forward worksheet to show it.

Like I said, it's complicated. It's the government. 

View solution in original post

7 Replies
Level 15

Do I have to use a capital loss carryforward even if I have no taxable income?

The simple answer is no.  But, you must report the capital loss carry forward on your current year return. You are not allowed to postpone using it or saving it for a more advantageous time.

The actual is answer is more complex. Although you have to report it, it may not all get wasted (used). The best thing to do is prepare a tax return (even if you aren't required to file) to accurately calculate the carry over to the next year.

The tax law says you have to use a capital loss before you're allowed to use a personal exemption. If the personal exemption would completely eliminate your income, you would rather use the personal exemption first. That way, the capital loss would carry over to the next year. Instead, you're forced to use the capital loss, and there's no carryover for unused personal exemptions. Don't ask me why the law works this way: that's just the way it is. 

An example may help explain it:
You have a $12K capital loss carry forward from the previous year. Your AGI is $4000, including the $3000 loss on line 13. Meaning your income was $7000 before deducting the loss,
  $7000
-   6100 Standard deduction
=    900  Taxable income before exemptions and capital losses are deducted

  $3000 Capital loss shown on line 13
-     900 Used to reduce pre-exemption taxable income to 0
=   2100 of that $3K capital loss will be carried to 2014.  That's in addition to the $9K (12,000-3,000), so $11,100 will be carried forward. TurboTax can handle this calculation and will prepare a carry forward worksheet to show it.

Like I said, it's complicated. It's the government. 

View solution in original post

New Member

Do I have to use a capital loss carryforward even if I have no taxable income?

Complicated? No. The government wants you to use up your loss carry forward against nothing instead of allowing you to carry it forward to use against a future gain. Not fair. Not right.
New Member

Do I have to use a capital loss carryforward even if I have no taxable income?

I totally agree. This is unfair and wrong. If my taxable income in 2014 is 0 and I had $3500 of capital loss, how can I use Turbo Tax to save the entire capital loss ($3,500) for the next year?
Level 15

Do I have to use a capital loss carryforward even if I have no taxable income?

"If my taxable income in 2014 is 0"
How did your taxable income get to zero? Was it because you used the capital loss? You cannot force TT to " save the entire capital loss". It will correctly calculate how much of it you are allowed to "save" .
New Member

Do I have to use a capital loss carryforward even if I have no taxable income?

My income was $645 in 2014 (from dividends). Personal exemption and standard deduction (all together $10,150) would help eliminate my taxable income to 0 (actually negative). In this case,  am I eligible for carry forward of the entire capital loss ($3,500) to the next year? Thank you!
Level 15

Do I have to use a capital loss carryforward even if I have no taxable income?

Yes. You don't need to go thru the exercise of preparing a tax return. The entire $3500 is carried forward. But, you should prepare some documentation, such as the calculations above
New Member

Do I have to use a capital loss carryforward even if I have no taxable income?

This was a very useful answer. But now that personal exemptions have been removed from the tax code, does the answer still apply? In other words, if there is no personal exemption to use, do I still have to use the carryover loss?