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

[Kr_W]

Thanks Hal_AI.

You answered my question! THANK YOU SO MUCH!

I get what you are saying.

If my low income is “only” capital gains, it must be netted against my carry over loss. And yes, I had put I - $ 2500 on line 7 of 1040, and still my net income on line 15 of 1040 is a huge minus number. That means, I can add the -$2500 of line 7 of 1040 back on line 2 of the carry over worksheet. That still leaves me with a large minus income on the worksheet line 1. You are confirming that the loss of $2500 of schedule D (line 15 and 21) will become my carry over on the worksheet. Thanks.

Pretty sad, given that my income is so low and still I have to use up all my carry over loss.

I guess now that the IRS language is sometimes pretty inaccurate.

In an IRS Note from 2009 it states: „ In a year that the taxpayer's deductions exceed income by an amount greater than the sum of 3000 and the amount allowable for personal exemptions, the carry over loss will not be reduced “. I know it's now standard deduction instead of personal exemption. STILL the IRS should have written EXCEPT if that income is a “capital gain”.

[Ace_Snow12]

Sorry to open up this topic again.
I have a dependent I am doing taxes for. They have unearned taxable income (interest/dividends) of say 3K (before the standard deduction), single digit capital gains from this tax year, and say 1K of capital loss carry over from the previous year.
My belief is they would not have to pay any taxes on the 3K at all without applying the capital loss carry over.

It seems that turbotax is forcing me to use the carryover loss this year even though there was had basically no capital gain and the income is low enough not to need to pay taxes.
In this scenario is the IRS forcing me to use the carryover loss and if not, how can I configure turbotax so that I can not use the carry over loss this year and make it available for next year?

Thx.

[VolvoGirl]

You have to report the carryover every year until it's used up.  You can't skip a year.  Even if you don't report it on your return you have to reduce it by the 3,000 (1,500 MFS) when you carry it over to next year.  You can't choose when to use it.

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.

[Hal_Al]

A dependent, with unearned income,  only gets a standard deduction of $1300.  So, with $3K of int/div, the dependent-taxpayer has taxable income. The capital loss carryover must be applied.