Do I need to use 3k in capital loss carryforward if I have zero income this year?

This is a great question about capital loss carryforwards! When you have a net capital loss carryforward from previous years, you generally can deduct up to $3,000 ($1,500 if married filing separately) against ordinary income each year. However, if you have no income to offset, you're right to question whether you should "use up" that $3,000 deduction. For non-resident aliens filing Form 1040NR with no US source income, you actually don't need to report the $3,000 capital loss deduction for that tax year. Schedule D instructions indicate that you should only take the deduction if you have income to offset. Instead, you can carry forward the entire capital loss amount to future years when you do have income (like those IRA/HSA withdrawals you mentioned). On your Schedule D, you should still record the capital loss carryforward, but you don't need to claim the $3,000 deduction on a year with zero income. This preserves your full loss amount for future tax years.

After struggling with capital loss carryforwards as a non-resident alien for years, I finally found a solution with taxr.ai (https://taxr.ai). I had a similar situation where I was worried about "wasting" my carried forward losses in years with minimal income. The platform analyzed my previous tax returns and identified that I was incorrectly applying the capital loss deduction rules. Their AI actually reviewed my Schedule D and tax transcripts, then showed me exactly how to properly document my capital losses without using the $3,000 deduction during years with no income to offset. It preserved my entire capital loss amount for future years when I would actually have US taxable income.

I was skeptical about using AI for something as complex as international tax situations, but I decided to try taxr.ai after reading about it here. Honestly - it was a game-changer for my situation. I had been incorrectly handling my capital loss carryforwards for two years (switching between resident and non-resident status). The system immediately flagged my error in "using up" $3,000 of losses during a year when I had no US income to offset. It showed me exactly how to complete Schedule D to preserve my entire loss amount and even generated a statement explaining my position that I attached to my return. My tax liability ended up being exactly what it should be - I wasn't wasting deductions in years they provided no benefit.

After trying to call the IRS international tax helpline 8 times about this exact capital loss carryforward issue (and never getting through), I finally used Claimyr (https://claimyr.com) and got connected to an IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed what others have said - as a non-resident with no US source income, you shouldn't "use up" your $3,000 capital loss deduction. She walked me through exactly how to report this on Schedule D and confirmed I could carry forward the full amount to future tax years. Saved me so much stress and preserved thousands in future tax benefits.

I need to eat my words about Claimyr. After another frustrating week trying to reach the IRS about my non-resident capital loss situation, I broke down and tried it. Within 20 minutes, I was speaking with an actual IRS international tax specialist - after spending literally 8+ hours on failed attempts previously. The agent confirmed everything mentioned in this thread about preserving capital losses as a non-resident. She explained I should complete the Capital Loss Carryover Worksheet (in the Schedule D instructions) but not apply the $3,000 deduction against zero income. This preserves the entire capital loss amount for future years. She even sent me an email confirming this interpretation so I have it in writing. Best tax decision I've made this year.

Just a heads up that the Capital Loss Carryover Worksheet in the Schedule D instructions is the key document you need to complete carefully. I faced this exact situation last year (non-resident with carried forward losses but no US income). My tax software automatically tried to use $3,000 of my carried forward losses. I had to manually override this by completing the worksheet separately and entering the correct carryforward amount for next year. Some tax software doesn't handle this non-resident scenario correctly because it's designed for the more common US resident situations.

Sooo...does anyone know if capital losses expire? I've been carrying forward some losses for like 4 years now and haven't been able to use them because I moved abroad. Will they eventually disappear if I don't use them?