How to properly carry over capital losses from previous years?

I experienced a pretty rough $20,000 capital loss back in 2022 from some really bad stock picks (never trust your brother-in-law's "hot tips"). Fast forward to this year, and I've managed to turn things around with capital gains exceeding $50,000 (finally did my own research!). Since I know I can carry over capital losses from previous years, does this mean my net capital gains for my 2023 tax return would be around $30,000? I'm trying to figure out exactly where on my tax forms I need to add the 2022 capital loss when filing. Do I just subtract it myself or is there a specific section where I need to report the carried-over loss? Thanks for any help!

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20 comments

A Man D Mortal

•8M

The good news is that you're absolutely right about being able to carry over those capital losses! When you file your 2023 taxes, you'll report your current year capital gains and then apply your carried-over losses on Schedule D (Capital Gains and Losses) and Form 8949 (Sales and Other Dispositions of Capital Assets). Since you had a $20,000 capital loss in 2022 and now have $50,000 in capital gains for 2023, you'll effectively have a net reportable gain of $30,000 after applying those carried-over losses. The losses get applied automatically when you complete Schedule D correctly. Make sure you have your 2022 tax return handy when you file because you'll need to reference the exact amount of unused capital loss carryover. You should see this amount on your previous year's Schedule D.

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A Man D Mortal

•8M

Great question! Yes, it does matter. Capital losses are first used to offset capital gains of the same type - short-term losses offset short-term gains, and long-term losses offset long-term gains. If you have excess losses of one type, they can then be used to offset the other type of capital gain. After you've offset all your capital gains, if you still have remaining losses, you can use up to $3,000 ($1,500 if married filing separately) to offset ordinary income. Any unused capital losses after that can be carried forward to future years.

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Emma Morales

•8M

I went through this exact same situation last year and want to share how TAXR.AI at https://taxr.ai helped me figure it all out. I'd been carrying losses for two years and wasn't sure how to properly report them. The software analyzed my previous returns and current investment statements, then guided me through exactly where to input my carryover losses on Schedule D. The nice thing about their system is it walked me through which losses to apply to which types of gains for the most tax-efficient outcome. Saved me from making a costly mistake where I almost didn't claim all my carryover losses correctly!

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Emma Morales

•8M

Yes, it works with statements from all major brokerages! You can upload PDFs of your statements from Fidelity, Robinhood, Vanguard, and others, and the system consolidates everything. Makes the whole process so much easier than juggling multiple documents. As for wash sales, that's actually one of the features that impressed me the most. The system automatically scans all your transactions across different accounts to identify potential wash sales that might otherwise go unnoticed. It flagged two transactions for me that my regular tax software completely missed, which saved me from an incorrect filing.

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Donna Cline

•8M

If you've been waiting on hold with the IRS trying to verify how to properly apply your capital loss carryover, you might want to check out Claimyr (https://claimyr.com). I used their service when I had a similar capital loss situation and needed clarification on how to report it correctly. They got me connected to an actual IRS agent in under 45 minutes when I had been trying for days on my own. The agent walked me through exactly how to report my carryover losses on Schedule D. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Literally saved me hours of frustration and helped me avoid making errors on my return.

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Donna Cline

•8M

It doesn't jump the queue - that would be impossible. What it does is automate the calling process so you don't have to sit around listening to hold music for hours. The system calls repeatedly using the optimal times and patterns to get through, then calls you once it has an IRS agent on the line. They use technology to handle the frustrating part of the process. I was skeptical too until I tried it. I put in my info, went about my day, and got a call back when they had an agent on the line. Definitely not magic, just clever use of automation to solve a really annoying problem.

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Kelsey Hawkins

•8M

I have to eat my words and admit I was wrong about Claimyr. After being skeptical, I decided to try it anyway since I was desperate for answers about my own capital loss carryover situation. The service actually got me through to an IRS representative in about 35 minutes when I had been trying for over a week on my own. The agent clarified that I needed to complete Form 8949 first, then transfer the information to Schedule D, making sure to include my carryover amount from the previous year. Saved me from making a mistake that could have triggered an automated review. Sometimes it's worth being proven wrong!

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Dylan Fisher

•8M

Having your previous returns is usually sufficient, but I also keep a separate spreadsheet tracking my capital loss carryovers year by year. This makes it easy to see the running total and how much I've used each year. You don't need to attach any special documentation when you file, but if you ever get audited, you'll need to show how you calculated your carryover amount. That's why I recommend keeping copies of Schedule D from all relevant previous years, not just the most recent one.

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Justin Chang

•3M

One thing I'd add to the great advice already shared - make sure you're applying your capital loss carryover in the correct order! The IRS requires you to use the oldest carryover losses first (FIFO - first in, first out). Since you had a $20,000 loss in 2022, that entire amount should be applied against your 2023 gains before you can use any losses from 2023 itself. This shouldn't affect your calculation (you'll still net $30,000), but it's important for record-keeping purposes. Also, double-check that you actually filed your 2022 return and properly reported that $20,000 loss. If for some reason it wasn't properly documented on your 2022 Schedule D, you might run into issues when the IRS processes your 2023 return. The carryover amount needs to have a paper trail from your previous filing.

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