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tdog110
New Member

My only income is SSI. I sold inherited stock for a loss. Do I have to file a tax return?

I have not filed taxes for several years due to disability. I have no other income. In 2020 I inherited a mutual fund and sold the stocks for a net loss. Do I need to file just to report a Schedule D and Form 8949?

5 Replies
Hal_Al
Level 15

My only income is SSI. I sold inherited stock for a loss. Do I have to file a tax return?

Q.  Do I need to file just to report a Schedule D and Form 8949?

A. No. 

 

But you should keep track of your adjusted capital loss carry forward, in case you need it in the future.  Most likely, the entire loss will carry forward.  For details, see 

https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/on-2018-i-had-0-incom...

 

My only income is SSI. I sold inherited stock for a loss. Do I have to file a tax return?

is this listed by the broker as Box E?

You may get a letter from IRS saying you have a gain, not a loss.

 

You can avoid that by filing a correct  tax return.

and your carryforward will be recorded.

Hal_Al
Level 15

My only income is SSI. I sold inherited stock for a loss. Do I have to file a tax return?

@fanfare  makes a good point.  It depends on how  (what IRS form) the capital loss and/or mutual fund sale were reported to you.  If the estate reported the capital loss on a form K-1, you do not need to file a tax return.  If a broker issued a form 1099-B, you still are not required to file.  But if the broker only showed the sale amount and neither the capital  loss or cost basis, there is a chance of hearing from the IRS, as they might assume the sale amount is taxable.

 

That brings up another issue.  Inherited assets get a "stepped up" cost basis. That is, the cost basis for an inherited asset (stocks, mutual funds, real estate) is the fair market value (FMV) on the decedent's date of death.  

 

My only income is SSI. I sold inherited stock for a loss. Do I have to file a tax return?

FILE the return to avoid an IRS letter later ... use one of the FREE options at the IRS : 

 

If you qualify   you can use one of  the 10 IRS FREE FILE options to file a fed & state return for free ... but you must log in thru the IRS site :

 

https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

 

 For Filing Season 2021, you must make $72,000 or below to use one of the 10  IRS Free File partner offers.

 

If you choose the TT option then you can log in with your same user ID and agree to switch to the FREE FILE option then your progress will be preserved. 

My only income is SSI. I sold inherited stock for a loss. Do I have to file a tax return?

There is no progress to be preserved, since the person has not yet decided to file.

Go through the IRS website to avoid surprises.

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