Author Topic: Taxact and Capital Loss Carryover  (Read 344 times)

jeromedawg

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Taxact and Capital Loss Carryover
« on: March 20, 2017, 08:16:50 PM »
Hey all,

So last year when filing taxes (via Taxact) I had well in excess of $3000 for capital loss carryovers from 2015. For some reason, the remaining carryover amount of $3456 was pre-filled into the capital loss carryover section - this doesn't seem right given that $3000 is the capital loss carryover max per year no? I'm not sure why Taxact pre-filled with an amount greater than $3000 but I'm assuming I should probably change it to $3000?

secondcor521

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Re: Taxact and Capital Loss Carryover
« Reply #1 on: March 20, 2017, 11:56:16 PM »
Your assumption is mistaken.

Any amount of capital loss can be carried forward.

The $3000 limit is the amount of capital loss in excess of any capital gains that can be used to offset ordinary income.

So if you had gains of $5,000, losses of $10,000, you could offset $3K of ordinary income in year N and would have a $2K carryover to year N+1.  If you had gains of $5K and losses of $20K, you could offset $3K of ordinary income in year N and would have a $12K carryover to year N+1.

In general, Taxact seems to get most mainstream scenarios correct.
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MustacheAndaHalf

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Re: Taxact and Capital Loss Carryover
« Reply #2 on: March 21, 2017, 07:47:45 AM »
Agreeing with secondcor521, but putting it differently:

You have $3456 of capital loss carryover.  If nothing else happens, you will subtract $3000 from your taxable income and be left with $456 for next year.  More likely, you have some kind of capital gains.. maybe $1000.  Then that first $1000 of gains meets $1000 of capital losses and both cancel out.  You would then be left with $2456 of capital loss to apply to the current year.

jeromedawg

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Re: Taxact and Capital Loss Carryover
« Reply #3 on: March 21, 2017, 10:50:31 AM »
Thanks all for the clarification! Was beginning to think the $3000 was an "offset" limit - makes sense now