I’ve been wondering about this for years and was hoping I wouldn’t have to deal with it, but here we are. Had to cut a big loss on an investment during the pandemic, so I’m looking at around $21K in tax loss carryover this year.
Since I can only claim $3K in losses per year (married), this is going to stretch over a few years. My question is: how do I keep track of what’s left for future years? I’m using tax software to handle everything, but I might make some gains in between, and I’m not sure how that affects the carryover.
For example, if I use up some of the loss in 2025 or 2026, I won’t know exactly what’s left by 2027 unless I track it somehow. Does the tax software manage this automatically, or is there something else I should do?
The carryover amount is calculated on each year’s tax return. Just make sure you have your previous year’s return when filing. If you use the same tax software every year, it should handle the carryover for you.
@Bailey
That makes sense, but I’m curious where it stores the leftover amount. For instance, I use H&R Block, and I wonder if there’s a box or something that tracks it. Like if I have a loss of -$22K for 2024, does it automatically adjust that with any gains the next year?
Or is there really no special “TL” box on the official forms?
@Hux
It’s on Schedule D, lines 6 and 14. Every year, you or your tax software uses the capital loss carryover worksheet (hidden in the Schedule D instructions) to update those numbers based on the previous year’s Schedule D.
If you stick with the same tax software, it should update everything automatically.
River said: @Hux
Haven’t used H&R Block in a while. TurboTax handles carryover really well.
I keep getting pulled back to H&R Block because of the sale prices every year. Might switch to TurboTax next time—I want to make sure it’s all done right. Thought about a CPA too, but they’re pretty pricey.
@Hux
To expand on what others said, the carryover numbers don’t show up on the last year’s Schedule D where the loss was recorded. Instead, they’re calculated from that Schedule D and appear on lines 6 and 14 of the new Schedule D, using the Capital Loss Carryover Worksheet in the instructions.
Basically, the old return doesn’t have any specific spot for the carryover.
Your tax return takes care of this. If you stick with the same tax software, it should carry over losses automatically and apply it to current year gains or the $3K of ordinary income allowed each year. If you switch software, it’ll ask you to enter the carryover amount.
Quick answer: Your tax program keeps track of it. If you need to report it in a new year, just look at last year’s return for the carryover amount and enter it.
If you’re planning to offset gains in a certain year, just check your prior year return for the loss amount to use.
You can take capital losses up to your gains, but only up to $3K in losses per tax year. So if you make $23K and use your $21K capital loss, you’d net a $2K gain.
If you only make $15K, you can offset that with $18K in losses, leaving a $3K capital loss.