Capital Loss Carry Forward

Forum|Forum|5 years ago
March 3, 2021
2 replies
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Example situation using Turbo Tax 2017 Desktop for single head of household;

2017 reported $18,329 net loss, claimed $3,000 for 2017 tax return with a Short-term capital loss carryforward to 2018 of $15,329;

2018 Had no income, didn't file a return (forgot I had a carry-forward loss from 2017);

2019 Had no income, filed a TurboTax free online return for receipt of a $5 donation, for purposes of establishing COVID Relief Check (forgot I had a carry-forward loss from 2017);

2020 Filed a TurboTax free online return with $21,000 gross with standard deduction, net taxable income of $8648, $863 fed taxes due, 1,385 fed taxes withheld = $522 refund rec'd (forgot I had a carry-forward loss from 2017).

QUESTION #1: Do I need to go back and file 2018 even though there is no income, for purposes of carrying forward the 2017 Capital Loss of $15,329? Can I do this with online TurboTax online?

QUESTION #2: Do I need to go back and file Amended 2019 via TurboTax online even though there is no income, for purposes of carrying forward the 2017 Capital Loss of $15,329?

QUESTION #3: If the answer to #1 and #2 are yes, am I able to Amend 2020 TurboTax online even though I have already rec'd a $522 refund, for purposes of claiming any part of the 2017 Capital Loss Carryforward of $15,329 that was supposed to be carried from 2017 to 2018? If yes, will the TurboTax 2020 online program which I used be able to automatically import the 2017 TurboTax desktop return-worksheet to automatically calculate the Capital Loss Carryforward ?

Thank you!

Best answer by ColeenD3

Yes, I would amend each year to show the continuity of the carryover. Here is an excerpt Capital Loss:

Your capital loss carryover is reduced by the amount of capital loss that was actually used to reduce your taxable income, not by the amount of capital loss deduction shown on your tax return. In figuring this amount, you’re allowed to use all other deductions before using the capital loss deduction. This rule is reflected in a Capital Loss Carryover Worksheet that appears in the instructions for Schedule D and also in IRS Publication 550, Investment Income and Expenses.

I would, for prior years, print form 1040 for years you had no income and1040x from the IRS website and do it by hand. You are not changing anything, you are showing the carryover from year to year. The 2020 program will not bring forward from 2017. The 2020 amendment 1040x is not yet ready.

ColeenD3Answer

Level 15

Yes, I would amend each year to show the continuity of the carryover. Here is an excerpt Capital Loss:

Your capital loss carryover is reduced by the amount of capital loss that was actually used to reduce your taxable income, not by the amount of capital loss deduction shown on your tax return. In figuring this amount, you’re allowed to use all other deductions before using the capital loss deduction. This rule is reflected in a Capital Loss Carryover Worksheet that appears in the instructions for Schedule D and also in IRS Publication 550, Investment Income and Expenses.

I would, for prior years, print form 1040 for years you had no income and1040x from the IRS website and do it by hand. You are not changing anything, you are showing the carryover from year to year. The 2020 program will not bring forward from 2017. The 2020 amendment 1040x is not yet ready.

S

stvmiaAuthor

Level 2

Thank you Coleen. Your information was very helpful!

Now I have one f/u question. Can I use some portion of the carryforward in an amended 2020 return to increase my refund amount ?

And a F/U question for any TurboTax support people who might be monitoring, how can I use TurboTax to: 1) file a no-income 2018 return that imports my 2017 desktop TurboTax data; 2) amend my 2019 online free TurboTax no income return to include the carryforward loss data from 2017-2018?; and, 3) get my TurboTax online free 2020 return amended with the carryforward loss data from 2017-2019?

Do I have to do it all manually or does TurboTax have the products to support this lookback situation?

Than you again coleen!!

How can I use Turbo Tax

S

stvmiaAuthor

Level 2

@ColeenD3 gave you excellent advice, and yes the Capital Loss Carryforward can reduce your 2020 taxes.

You will be able to download the software for free if you originally purchased the TurboTax software. You will be able to use the amend process and select back to 2017 to prepare your returns.

You will receive a downloaded copy of the desktop version of TurboTax. Here is how to amend your 2019 tax return.

Some quick ground rules:

Be sure the original return was filed and accepted.
DO NOT go back into the return or change anything before you start the amendment process.
Gather everything you need before you start.
Before you start be sure to save a copy of the original return in a safe place.
Complete the entire amendment process before you log out.
Save the amended return under a different name.

You can correct a return that you've already filed and had accepted. Select the year that applies and use this guide to proceed.

Select your tax year for amending instructions:

For additional information please refer to How to Amend

BTW, the 2020 1040x has been out for a while now... (https://www.irs.gov/pub/irs-pdf/f1040x.pdf )

J

jnjtxs2020

Level 2

in 2018 we had capital losses but the carryover (line 14) on the return is blank and therefore does not show on the 2019 return.

Our 2018 return we had capital loss but the carryover line (14) is blank and the 2019 does not show the 2018 loss. Can we recoup the loss through an amended return or another way?

can