Questions & Answers

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 2020 tax return. Look at Schedule D lines 15 and 16 of your 2019 tax return. If Schedule D lines 15 and 16 are losses, then you might have a capital loss carryover to 2020. Use the Capital Loss Carryover Worksheet in the 2020 Schedule D instructions to calculate the amount of the carryover, and whether it is short-term or long-term.

Basically, if you weren't able to use your capital loss on last year's tax return then you can use it this year. For example, if your taxable income was zero last year (income minus deductions and exemptions) then you didn't get any benefit from the capital loss so the capital loss carries over to this year's return.

Another example would be if your capital loss was more than $3,000 and you didn't have any capital gains to offset against the capital losses. You can only deduct a maximum of $3,000 of capital losses on your Form 1040 each year. Any capital losses in excess of $3,000 carry forward each year until they are all used up.

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