I failed to report my carried-over losses from 2021 in my 2022 tax return - what do I do now?

Yes, you'll need to amend your 2022 return to correctly report the capital loss carryover from 2021. This is important even though it won't change your 2022 tax liability - it establishes the correct capital loss carryover amount for 2023. You'll need to file Form 1040-X (Amended Return) along with a corrected Schedule D and Form 8949 for 2022. On Schedule D, you'll include the $16k carryover loss from 2021 on line 14 (which is where you report the carryover from the previous year). This won't change your 2022 deduction (still limited to $3k), but it will increase your carryover amount to 2023. For 2023, you'll then be able to use your total carryover loss to offset your $10k gain, plus take up to $3k additional loss against other income, with any remaining losses carrying forward to 2024. The IRS typically processes amended returns in 16-20 weeks, and you have up to 3 years from the original filing deadline to submit the amendment.

I went through something similar last year and discovered taxr.ai (https://taxr.ai) which was super helpful for figuring out how to handle my messed up investment losses situation. I had completely forgotten to carry over some losses from previous years and was stressing about how to fix it. Their system analyzed all my investment documents and previous returns and highlighted exactly where the errors were. It showed me the specific forms I needed to amend and even generated the correct numbers for each line. Saved me hours of confusion and probably kept me from making more mistakes.

Just wanted to update after trying taxr.ai for my similar capital loss carryover problem. It actually worked really well! I uploaded my returns from the last three years and my investment statements, and it immediately spotted that I had messed up my carryover losses. The system showed me exactly where I went wrong and generated all the forms I needed for the amendment. What really impressed me was that it explained WHY each change was needed in plain English. I've been afraid of amending returns because I was worried about making things worse, but this made it pretty straightforward. The amended return is now submitted and I'm just waiting for processing. Definitely feeling more confident about my 2023 filing now too!

For anyone dealing with the IRS about amended returns, I highly recommend using Claimyr (https://claimyr.com) to actually talk to a real person at the IRS. I submitted an amended return for a similar issue last year and had no idea if it was being processed correctly. After waiting on hold for literally hours over multiple days trying to reach someone, I found Claimyr and they got me connected to an IRS agent in about 20 minutes. The agent was able to confirm they received my amendment and tell me exactly when I could expect it to be processed. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c - basically they wait on hold for you and call you when an actual human picks up. Saved me so much frustration!

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate to talk to someone about my amended return that's been sitting in limbo for months. It worked exactly as described - I entered my number, they called me back about 2 hours later when an actual IRS agent was on the line. The agent was able to look up my amended return status and explain that there was an issue they needed additional documentation for, which I never would have known otherwise. For anyone dealing with amended returns like the original poster, being able to actually talk to the IRS about your specific situation is incredibly valuable. They could tell me exactly what was happening rather than me just checking "still processing" on the website for months.

Just wanted to add that you should make absolutely sure that when you amend your 2022 return, you're only changing the parts related to your capital loss carryover. A common mistake is to recalculate everything from scratch which can introduce new errors. The key is to focus only on Schedule D and Form 8949. Your original return was technically correct in terms of the bottom-line tax calculation for 2022 - you were still limited to a $3k deduction regardless of whether you had $16k or $32k in total losses. The amendment is really about setting up the correct carryover amount for 2023. One more tip - keep copies of EVERYTHING, including your original return, the amended return, and especially the calculation worksheets showing how you determined your carryover amounts. If you get audited, having that paper trail will save you major headaches.

Don't overlook the importance of matching what's on your 1099-B forms when amending. Your broker should have sent these forms showing your trading activity. Make sure what you're reporting matches these exactly. I went through a similar amendment and made the mistake of not having my forms in front of me when I redid everything. The IRS flagged it because the numbers didn't match what my broker reported. Caused a huge delay and I ended up having to redo the amendment.

I'm dealing with a very similar situation right now - had significant losses in 2021 and 2022 that I didn't properly carry forward, and now I'm trying to clean everything up before filing my 2023 return. One thing I learned from my tax preparer is to be extra careful about the timing of when you file the amended return versus your current year return. While you don't have to wait for the amendment to be processed, you do want to make sure you're consistent in how you calculate your carryover losses between the two returns. Also, if you're using tax software for your 2023 return, most programs will ask you to manually enter your capital loss carryover from the previous year. Make sure you use the CORRECTED amount (including that missing $16k from 2021) rather than what actually appeared on your filed 2022 return. Keep detailed notes about this adjustment in case you need to explain it later. The good news is that in your case, the math works out nicely - your $10k gain in 2023 can be completely offset by your carryover losses, plus you'll still have losses remaining to carry forward to future years. Just make sure you document everything clearly!