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Capital loss carryover allows you to apply any unused capital losses from previous tax years to offset income this year, offsetting any capital gains first, and then ordinary income up to $3,000, or $1,500 if Married Filing Separately, potentially reducing your taxes.

This applies to you if you sold investments in prior years, had a net loss, and haven’t used all of the losses already.

Up next, we’ll walk you through entering your information from last year’s tax return and apply any carryover amount to this year’s income.