Can I skip years when applying capital loss carryover on my taxes?

Capital losses must be used in consecutive years - you can't choose to skip a year and then resume applying them later. The IRS requires that you apply your capital loss carryover to the next tax year regardless of whether it benefits you or not. In your situation, since you didn't claim the $3,000 carryover on your 2023 return, you should file an amended return (Form 1040-X) for 2023 to claim that portion of your loss. Then you can claim the remaining $1,500 on your 2024 return. The carryover rule exists to help taxpayers who have losses exceeding the annual $3,000 limit, but it doesn't give you the flexibility to pick and choose which years to apply those losses. It's a sequential process that must be followed year by year.

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To simplify what others have said: capital losses follow a "use it or lose it" approach for each tax year. You must apply the carryover to the next tax year, and if you skip a year, you technically forfeit that portion of the deduction. The best approach is filing amended returns for any years you missed. For example: - 2022: $7,500 loss, deducted $3,000, leaving $4,500 carryover - 2023: Should have deducted $3,000, leaving $1,500 carryover (need to amend) - 2024: Should deduct remaining $1,500 Don't try to skip 2023 and apply $3,000 to 2024 - that's not allowed and could trigger an audit.

Quick question - does anyone know if TurboTax automatically tracks capital loss carryovers from previous years? I feel like I remember entering a loss a few years ago but don't recall seeing it carried forward to later returns.

I went through this exact same situation a couple years ago and learned the hard way that you absolutely cannot skip years with capital loss carryovers. The IRS treats it as a sequential requirement - you must use the carryover in the very next tax year, even if it doesn't provide much benefit. Since you forgot to claim the $4,500 carryover on your 2023 return, your only option is to file an amended return (Form 1040-X) for 2023 to claim $3,000 of that loss. Then you can claim the remaining $1,500 on your 2024 return. I know it's a pain to file an amended return, but it's worth it to get that deduction and stay compliant with IRS rules. The alternative is essentially forfeiting those losses forever, which would be throwing money away. Make sure to keep good records of your carryover amounts going forward - I started keeping a simple spreadsheet to track mine year by year.

I've been dealing with capital loss carryovers for several years now, and I can confirm what others have said - you absolutely must use them in consecutive years. The IRS doesn't give you the option to pick and choose which years to apply the losses. In your case, since you missed claiming the $4,500 carryover on your 2023 return, you'll need to file Form 1040-X to amend that return and claim $3,000 of the loss. Then apply the remaining $1,500 on your 2024 return. One thing I learned the hard way is to always check line 16 of Schedule D from your previous year's return - that shows your capital loss carryover to the next year. I now make a note in my tax folder each year with the carryover amount so I don't forget it when preparing the following year's return. The sequential requirement exists because the IRS wants to ensure taxpayers don't strategically time their loss deductions for maximum benefit. It's frustrating when you forget, but the amended return process isn't too complicated and it's definitely worth recovering those deductions.

I've been following this thread and want to add some clarity based on my experience as a tax preparer. Everyone is correct that capital loss carryovers must be used consecutively - there's no "skipping" allowed under IRS rules. For your specific situation, Ravi, you have two options: 1. File Form 1040-X to amend your 2023 return and claim the $3,000 carryover you missed, then claim the remaining $1,500 on your 2024 return. 2. If you choose not to amend 2023, you unfortunately forfeit that $4,500 carryover entirely. You cannot apply it to 2024 or any future year. The IRS is very strict about this sequential requirement. The logic is that capital loss carryovers are meant to help taxpayers in the immediate years following large losses, not to be strategically saved for more advantageous tax years. I'd strongly recommend filing the amended return for 2023. Even if it's a bit of paperwork, you're essentially leaving $3,000+ in tax savings on the table otherwise. The statute of limitations for amendments is three years from the original filing date, so you should still be within the window for 2023.