Why do I owe so muc

[birch]

So, I know this is dumb, but I filed an extension in April because when I put everything in, it said I owe more this year than I did last year. This is the first time I've used TurboTax. In 2021, we made a little less money but had several thousand dollars in short term capital gains when my husband decided to play with crypto like a lunatic. He then lost those gains (and more) in January 2022, so this year we have a ton of losses. Even with having to carry over a lot of those losses (grr...), I figured taxes would be less, or at least the same, but we owe an extra $3k. I feel like I had to have done something wrong.

How do I figure out where I'm going wrong or if I just really owe more money?

[BettieG]

Hi @birch!

Thanks for your question!  And, it's not a dumb question -- there are no dumb questions regarding taxes!

While I don't have access to your actual tax return, I will offer the following insight:

First, it sounds like you have a "ton of (capital) losses" in 2022.  The good news is that net capital losses are deductible on your tax return, but only up to $3,000 per year.  Any capital losses in excess of $3,000 in 2022, will get carried forward to future years, where they can offset income in those future years -- again, up to $3,000 per year.  Here's a really great article that explains this.

In all likelihood, when you estimated what your tax liability for 2022, you included the full amount of the capital loss, without realizing that only $3,000 of the loss can be used in 2022.

You likely did nothing wrong when you prepared your 2022 tax return.  And, as long as you use TurboTax each year, your capital loss will carryforward to the next year, and the allowable amount will be automatically entered.  See this article for the details.

It sounds like you're doing great on your taxes, but I'm sorry you had an unhappy surprise on your tax balance due.

One other thing might be going on:  If your 2021 tax return reflected the Recovery Rebate Credit (stimulus payment), that may have resulted in a tax refund in 2021.  Unfortunately, there was no stimulus payment in 2022, and the Recovery Rebate Credit doesn't apply in 2022.

I hope this helps!