If you sold stock or mutual funds at a loss, you can use the loss to offset any capital gains you had from similar sales. If the net amount of all your gains and losses is a loss, you can report the loss on your tax return and deduct it from other income.
You can report losses up to $3,000 ($1,500 if you’re married and filing a separate return). Any additional net losses are carried forward to next year’s return. As long as you have a net loss, you can continue to carry it forward indefinitely.
Calculate your capital loss on Schedule D and enter it on Form 1040, line 13. If you have any carryover from a prior year, TaxCut will help you locate the amount and correctly enter it on the forms. Any prior-year loss will be netted against this year’s gains. If you still have a loss, then the amount of the loss up to $3,000 ($1,500 if you’re filing separately) is reported on your tax return and is deducted from income.
If you’re carrying over losses to next year, TaxCut stores that information and then imports it into next year’s return. If you’re not importing a return from last year, you can find the carryover amount on last year’s Schedule D: Capital Loss Carryover Worksheet.