Is this the correct window where to add wife's capital loss to mine?

[asdfg1234]

First time filing as MFJ. Both of us had capital loss last year. Do I simply add my wife's capital loss to mine in this window? I am afraid that by doing so IRS will lose context how I got to that new number. However, I can't think of a better way.

[Mike9241]

not quite. because Turbotax doesn't know how much of her net capital loss was used on her return in 2023. you need to review her return because there should be a worksheet showing the components of her capital loss carryforward o 2024. if the worksheet is not available you can use the IRS schedule D instructions page d-11

https://www.irs.gov/pub/irs-pdf/i1040sd.pdf 

[asdfg1234]

I am a bit confused about the “not quite” response. Am I in the correct screen for adding my wife’s capital loss to my return? To clarify, I’m not trying to include her 2023 capital loss on our 2024 MFJ return; I want to include her capital loss carryover from her 2023 [to 2024] return, since she already used $3,000 last year. If that is what you meant.

[rjs]

You can't use the screen that you showed in your question. But the screen you need is missing from TurboTax for 2024, so you are going to have to enter your capital loss carryover amounts in forms mode.

You caused confusion because, in your original question, you referred to your wife's capital loss and your own capital loss. In your follow-up reply you "clarified" that you meant capital loss carryover. You do not enter your capital loss. You can enter your capital loss carryover. But you cannot enter it on the screen that you were looking at.

Prior to 2024 TurboTax used to ask if you know your capital loss carryover amounts or need help figuring out the amounts. If you said you needed help, you would get the screen that you showed in your question. If you said you know the amounts, you would get an entirely different screen where you could simply enter the capital loss carryover amounts. But the screen that you get if you say you need help does not handle your situation, where you and your wife filed separate 2023 tax returns, both have capital loss carryovers, and are filing jointly for 2024.

For 2024, TurboTax eliminated the question asking whether you need help calculating your capital loss carryover amounts. It just assumes that you do need help, and gives you the screen that you were trying to use. That screen is not asking you to enter your capital loss or your capital loss carryover. It's asking you to enter amounts from specific lines on Form 1040 and Schedule D in your 2023 tax return. Using that information it would calculate the capital loss carryover amounts to enter on your 2024 Schedule D. But as I said, it does not handle the situation where there are two separate 2023 tax returns and a joint 2024 tax return. You can only enter amounts from one 2023 tax return, not two separate 2023 returns. The screen that lets you enter the capital loss carryover amounts directly is not included in the 2024 TurboTax interview.

Here's what you have to do. You have to calculate your own capital loss carryover amounts from 2023 to 2024 yourself, outside of TurboTax. You have to do the same for your wife's capital loss carryover amounts from 2023 to 2024. Then you will add your capital loss carryover amounts and your wife's capital loss carryover amounts together, and enter the totals on the Federal Carryover Worksheet (not the Capital Loss Carryover Worksheet) in TurboTax. From the Federal Carryover Worksheet the carryover amounts will flow to the proper lines, lines 6 and 14, on Schedule D.

If you used TurboTax for your own tax return for 2023, you do not have to do any calculating. There is a Capital Loss Carryforward Worksheet in TurboTax that calculates the capital loss carryovers from 2023 to 2024. You can simply take the amounts from line 8 (short-term) and line 13 (long-term) on the Capital Loss Carryforward Worksheet (not the Capital Loss Carryover Worksheet). If you did not use TurboTax for 2023, calculate the carryover amounts using the Capital Loss Carryover Worksheet on page D-11 of the 2024 IRS Instructions for Schedule D. Read the instructions for the worksheet carefully, starting with the box at the top.

Do the same for you wife. If she used TurboTax for her 2023 tax return you can take the amounts from her Capital Loss Carryforward Worksheet. If she did not use TurboTax, use the Capital Loss Carryover Worksheet in the IRS instructions to calculate her carryover amounts.

When you have the capital loss carryover amounts for both of you, add together the four pairs of amounts (short-term and long-term, regular and AMT). Then go to forms mode in TurboTax and open the Federal Carryover Worksheet (not the Capital Loss Carryover Worksheet). On page 2 of the Federal Carryover Worksheet, enter the four totals on lines 12a, 12b, 13a, and 13b in the 2023 column. They will then appear on lines 6 and 14 of Schedule D.

[asdfg1234]

> When you have the capital loss carryover amounts for both of you, add together the four pairs of amounts (short-term and long-term, regular and AMT). Then go to forms mode in TurboTax and open the Federal Carryover Worksheet (not the Capital Loss Carryover Worksheet). On page 2 of the Federal Carryover Worksheet, enter the four totals on lines 12a, 12b, 13a, and 13b in the 2023 column. They will then appear on lines 6 and 14 of Schedule D.

12a,12b,13a and 13b fields in Federal Carryover Worksheet are not editable fields. If I click on those fields I get redirected to "Capital Loss Carryover Worksheet 2024" or "Capital Loss Carryover worksheet 2025".

Nevertheless the Capital Loss Carryover Worksheet 2024 has editable fields. Are you sure I don't have to edit Carryover Worksheet 2024 instead by simply adding wife's numbers to mine?

Picture for reference:

[rjs]

@asdfg1234 

Delete the Capital Loss Carryover Worksheet 2024. Open it in forms mode, then click the "Delete Form" button. Then you will be able to enter amounts on the Federal Carryover Worksheet lines 12a, 12b, 13a, and 13b.

(Sorry, in my test 2024 return I did not transfer from a 2023 return with a capital loss carryover.)

You cannot just add your numbers and your wife's numbers together on the Capital Loss Carryover Worksheet 2024. You have to fill out two separate Capital Loss Carryover Worksheets by hand, as I described above. There's no way to do that in TurboTax because it has only one copy of the Capital Loss Carryover Worksheet 2024.

The 2025 worksheet is a Capital Loss Carryforward Worksheet 2025, not Carryover. The distinction is important. Leave the Capital Loss Carryforward Worksheet 2025 alone. It will get updated as you work on your 2024 tax return. You don't make any entries on that worksheet.

[asdfg1234]

You’re right - after deleting the Capital Loss Carryover Worksheet 2024, I can now edit lines 12a, 12b, 13a, and 13b directly in the Federal Carryover Worksheet.

What I still don’t fully understand is the purpose of deleting the Capital Loss Carryover Worksheet 2024 and editing the Federal Carryover Worksheet directly, versus just modifying the existing Capital Loss Carryover Worksheet 2024 by adding my wife’s numbers to mine, because:

1. In both methods, the amounts seem to flow all the way into the Capital Loss Carryforward Worksheet 2025 in exactly the same way.

2. As far as I know, none of these three worksheets are actually submitted to the IRS with the return. IRS will never see them, right?

So is the main reason for creating two separate Capital Loss Carryover Worksheets by hand simply to keep a record of which spouse owns which portion of the merged capital loss — in case we file separately in future years and still have unused carryovers?

[rjs]

@asdfg1234 

If you add your numbers and your wife's numbers together on one Capital Loss Carryover Worksheet I don't think you will get the same results as if you calculate the carryovers separately on two separate worksheets. You would be adding amounts from your 2023 tax return to amounts from her 2023 tax return and treating the totals as if they came from one joint 2023 tax return. You can try doing it both ways if you like. It only takes a few minutes to work through a Capital Loss Carryover Worksheet on paper.

If you do it in TurboTax, what ends up on the Capital Loss Carryforward Worksheet 2025 is not the only concern. You have to make sure that the amounts on Schedule D lines 6 and 14 on your 2024 tax return are correct.

And yes, since you and your wife have separate investment accounts, you do have to keep track of how much of the capital loss carryover each of you owns, for the reason that you stated.

You are correct that the worksheets are not sent to the IRS when you file your tax return. But the IRS has enough information from your tax returns to know if you did the calculations correctly. If the IRS questions the carryover amounts on your Schedule D you would have to show them your worksheets to show how you calculated the amounts, so it's not necessarily true that the IRS will never see them.