Puzzled with how a Capital Loss is applied

[lighter1]

In my TurboTax session filing 2023 taxes I'm seeing the following values in regards to the capital loss:

Capital loss carryover from 2022	-$10,918.00
All capital losses used in 2023	$10,918.00
Remaining losses carried forward to 2024	$0.00

My understanding is: given I'm filing jointly I may reduce my 2023 income by $3,000 max, and then 10,918-3,000 = $7,918 of losses would be carried to the year of 2024.

Questions:

1. Why does the 2nd row "All capital losses used in 2023" show I used $10,918 of the capital losses in 2023 if the max possible is 3,000 ?

2. Why did remaining losses carry forward to 2024 as $0.00 instead of 10,918-3000 = $7,918 ?

[rjs · Accepted solution]

You have a misunderstanding of how capital losses are used. Capital losses, including a capital loss carryover, are first used to offset any capital gains. There is no maximum for how much of the capital loss can be applied to capital gains. If the total capital losses are more than the total capital gains, a maximum of $3,000 of the remaining loss (that was not used to offset capital gains) can be used to reduce other income. If there is still unused capital loss, it is carried over to the next year.

It looks like you had total capital gains in 2023 of at least $7,918, so all of your capital loss carryover from 2022 was used to offset 2023 capital gains, and possibly up to $3,000 of other income. So there is no remaining loss to be carried over to 2024. If your total capital gains were $10,918 or more, then all of your capital losses were used to offset capital gains, and none of the loss was applied against other income.