OK. My taxes are pretty simple this year. And it looks like the standard deduction is all that we need for 2023 taxes. OK. So, I sold one stock at a loss in 2023. The loss was approximately a $2000 loss (long term capital loss). So… I am thinking ahead to 2024 taxes… We will be selling a few more stocks at a long term capital gain in 2024. If I use the standard deduction for 2023 taxes… can I carry forward the 2023 loss and use it to offset my 2024 capital gains from selling stock in 2024? Or does the loss for 2023, stop there? Thanks for your help.
The loss can be carried forward. Just keep good records.
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Hi Arindam, Thanks for the reply. So… if we only need to use the standard deduction for perhaps 3 years… I can carry forward my losses for those 3 years and THEN use them, (Example, if I don’t have significant capital gains until year 4 or something?) Thanks so much.
Upto $3000 losses can be deducted against income, even if you take standard deduction.
Limit on the deduction and carryover of losses
If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss shown on line 16 of Schedule D (Form 1040), Capital Gains and Losses. Claim the loss on line 7 of your Form 1040 or Form 1040-SR. If your net capital loss is more than this limit, you can carry the loss forward to later years. You may use the Capital Loss Carryover Worksheet found in Publication 550 or in the Instructions for Schedule D (Form 1040)PDF to figure the amount you can carry forward.
For additional details see here…
footsox,
Investment losses can be carried forward until you die.
The easiest way to keep track of them is to use the same tax prep software each year and to use the present year’s program to retrieve the accumulated past losses from your prior year filing (which you saved in multiple places in that program’s format).
I like TaxCut. Others will have their own preference.
Whether you take a standard deduction or itemize your deductions has NOTHING to do with calculating your capital gains.
First, that loss would be applied to any capital gains that you realized during 2023. Then, if you still have a net loss, up to $3000 of that net loss will be applied to your ordinary income for 2023. In your case, that means that you would have no remaining capital loss.
Again - one has NOTHING to do with the other. You seem to have a severe misunderstanding of how taxes are calculated. I will (once again) STRONGLY RECOMMEND that if you are unwilling to continue paying your CPA to do your taxes, that you take advantage of the AARP Foundation’s Tax Aide service, where your taxes will be prepared for you for free. Here is the locator webpage AARP Foundation Tax-Aide Locator
AJ
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That’s not correct in this case. The loss is only $2000, so it will be applied to ordinary income.
AJ
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But only if you continue to have a net loss of more than $3,000 to carry forward. Each succeeding year, the carried forward capital losses will first be applied to realized capital gains, and then $3,000 will be applied to ordinary income. Then if you still have capital losses that haven’t been exhausted, the remaining losses will be carried forward.
In this case, the loss was only $2,000, so there is no loss to carry forward.
AJ
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AJ,
You’re right. I didn’t pay attention to the fact there was only a single loss of just $2k, not a group of losses that totaled more than $3k, the amount that can be used to reduce ordinary income each tax year.