What are capital loss carryovers?
If you have more capital losses than capital gains in previous years, part of those losses may be carried over to your 2025 tax return. Check Line 16 on Schedule D of your 2024 tax return. If Line 16 on Schedule D shows a loss, you could have a capital loss carryover to 2025. To calculate the amount of the carryover and whether it's short-term or long-term, use the Capital Loss Carryover Worksheet found in the 2025 Schedule D instructions.
Basically, if you couldn't use your capital loss on last year's tax return, you can use it this year. For instance, if your capital loss was over $3,000 and you didn't have any capital gains to offset those losses. You can only deduct a maximum of $3,000 of capital losses on your Form 1040 each year. Any capital losses that exceed $3,000 will carry forward each year until they're fully used up.
Another example is if your taxable income was zero last year (income minus deductions and exemptions), you didn't get any benefit from the capital loss, so it carries over to this year's return.
Basically, if you couldn't use your capital loss on last year's tax return, you can use it this year. For instance, if your capital loss was over $3,000 and you didn't have any capital gains to offset those losses. You can only deduct a maximum of $3,000 of capital losses on your Form 1040 each year. Any capital losses that exceed $3,000 will carry forward each year until they're fully used up.
Another example is if your taxable income was zero last year (income minus deductions and exemptions), you didn't get any benefit from the capital loss, so it carries over to this year's return.
