Question

Capital Gains and Losses - Capital Loss Limit and Carryforward to Next Year

Accepted Answer

**The information below has not been verified for the 2021 tax year as the IRS Pub. 550 has not yet been released by the IRS.**

You may deduct capital losses up to the amount of your capital gains, plus $3,000 ($1,500 if married filing separately). If part of the loss is still unused, you can carry it over to later years until it is completely used up.

Any capital loss carryover to the next tax year will automatically be calculated in TaxAct^®.

To access the Capital Loss Carryforward Worksheet in your current year's return to see the amount which will be carried over to the next year:

Online Navigation Instructions

You need to view the worksheet as a print PDF; if you need help, go to our Printing Your Return and Individual Forms FAQ.

Desktop Navigation Instructions

From within your TaxAct return (Desktop), click Forms in the options bar to view Forms Explorer (if it is not already visible).
Click Federal from the dropdown in Forms Explorer, then click the Worksheets dropdown (if it is not already expanded).
Scroll down and click Schedule D Capital Loss - Carryforward to Next Year, and it will appear in Forms View.
If an Unable to open form directly pop-up appears, it will have a list of forms that you still need to enter your data into first.

Note. If you import your current year's information into the following year's return, this information will automatically be entered for you on Schedule D (Form 1040) Capital Gains and Losses.

Per IRS Publication 550 Investment Income and Expenses, page 66:

Capital loss carryover. If you have a total net loss on line 16 of Schedule D (Form 1040 or 1040-SR) that is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you had incurred it in that next year. If part of the loss is still unused, you can carry it over to later years until it is completely used up.

When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year.

When you carry over a loss, it remains long term or short term. A long-term capital loss you carry over to the next tax year will reduce that year's long-term capital gains before it reduces that year's short-term capital gains.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.