Can married filers only carry over $1500 in capital losses per year to offset future capital gains?

Thanks, that makes more sense! So just to double check - if I'm married filing jointly and have a $20,000 capital loss this year with no gains, I can deduct $3,000 from ordinary income this year and carry forward $17,000 to future years? And I can keep carrying forward until I've used it all up?

Yes, that's exactly right! You can deduct $3,000 from your ordinary income this year, and carry forward the remaining $17,000 to future years. There's no time limit on how long you can carry forward these losses. You can use that $17,000 to offset any amount of capital gains in future years. If you have $5,000 in gains next year, you'd use $5,000 of your carryover losses to offset them completely, then deduct another $3,000 against ordinary income, and carry the remaining $9,000 forward to the following year. You keep doing this until you've used up all your losses.

Does it actually connect to your brokerage accounts? I have investments across like 4 different platforms and tracking all the tax lots is giving me a headache.

I'm skeptical about these tax tools. How is this different from TurboTax or whatever? They all seem to ask the same basic questions and the capital loss carryover worksheet is pretty standard.

It doesn't directly connect to brokerage accounts, but you can upload your 1099-B forms or trading summaries and it extracts all the information automatically. I had accounts with Fidelity, Vanguard and Robinhood, and it handled all of them without any issues. Made tracking tax lots across multiple platforms super simple. The main difference from TurboTax is that it's specifically designed for investment-related tax situations. It goes much deeper into capital gains/losses, wash sales, and investment deductions than general tax software. It also provides explanations of tax laws as they specifically apply to your situation rather than generic guidance. The capital loss carryover tracking is much more detailed and user-friendly than what I found in TurboTax.

Wait how does this actually work? Does it just call the IRS for you or something? I don't understand how they get you through faster than calling yourself.

Yeah right. Nothing gets you through to the IRS faster. I've spent literally DAYS on hold over the past few years. If this actually worked, everyone would be using it and the IRS would just shut it down.

It essentially holds your place in the IRS phone queue for you. You register your number and when they get an IRS agent on the line, they call you and connect you directly to the agent. You don't have to stay on hold the whole time. I was skeptical too, but it actually works. The IRS doesn't shut it down because it's not doing anything against their rules - it's just waiting on hold for you. It's like having someone physically sit by the phone for hours so you don't have to. When I got connected to the agent, they answered all my capital loss carryover questions in about 10 minutes. So instead of spending 3+ hours on hold, I spent about 15 minutes total to get my answer.

My situation is slightly different. I have $45k in carry forward losses from previous years. If I make $100k in capital gains this year, I can use all $45k to offset, right? And is there any difference between long term vs short term losses when offsetting gains?

You can absolutely use all $45k of your carry forward losses to offset your $100k in gains. There's no limit when offsetting gains (the $3,000 limit only applies to offsetting ordinary income). Regarding long term vs short term, there are specific ordering rules. First, short-term losses offset short-term gains. Then, long-term losses offset long-term gains. If you have excess in one category, it can offset the other category. So if you have more short-term losses than short-term gains, the excess can offset long-term gains, and vice versa. The IRS wants you to match like-with-like first, then cross over if needed.

PREACH! The entire tax code is unnecessarily complicated. Why should we need special tools or have to call the IRS just to understand basic rules? And heaven forbid you make a mistake. I made an error on my capital loss carryover two years ago and got hit with a $430 penalty even though I ended up OVERPAYING my taxes.

Thanks for agreeing! And wow that penalty situation is ridiculous. It's like they're trying to trip us up. I've been using the same accountant for years just because I'm terrified of making a mistake, even though it costs me $400 every time. The frustrating part is that the IRS already has most of our financial info from our employers and investment companies. They could just calculate it for us, send us a bill, and be done with it. But instead we all stress for months about doing it right.