What am I doing wrong with the Capital Loss Carryover Worksheet? So confused!

Thanks for the response! I think I'm still getting confused on the worksheet itself. When I go through it step by step, Line 1 is ($8,021), Line 2 is 3000, and Line 3 says to add these together. That would be ($5,021), but then it says to enter 0 if the result is 0 or less. So would I enter 0 or ($5,021) on Line 3?

You would enter 0 on Line 3. The worksheet is designed this way because a negative number at that point indicates you have a loss carryover situation. Entering 0 there and continuing through the worksheet will ultimately result in your $5,021 carryover being calculated correctly. Remember that the worksheet is separating your losses into short-term and long-term components. As you continue through the rest of the worksheet (lines 4-13), it will guide you to the correct carryover amount. The $5,021 should appear on line 8 and/or line 13, depending on whether your original losses were short-term, long-term, or a combination of both.

That sounds interesting, but does it work if I have both short-term and long-term losses? My situation is kind of complicated because I have losses from multiple stock sales plus some crypto that tanked last year.

I'm skeptical of these tax tools. How does it handle the worksheet differently than just following the IRS instructions? I've found most tax software just walks you through the same confusing steps.

Yes, it definitely handles both short-term and long-term losses correctly. The system separates them just like the worksheet does, but does all the calculations automatically. You just upload your documents showing the losses, and it figures out how much gets applied to each category. For complicated situations with multiple stock sales and crypto, that's actually where it shines the most. It can process all those transactions and categorize them correctly without you having to manually sort through everything.

Does this actually work? I've tried calling the IRS three times this month and got disconnected every time after waiting 45+ minutes. How much does this service cost?

I'm super skeptical about this. The IRS is notorious for not answering calls. How exactly does this service get you to the front of the line? Sounds too good to be true.

Yes, it absolutely works! The service basically uses an automated system to wait on hold for you. When they reach an IRS agent, they call you and connect you directly. I was surprised too, but it saved me from having to stay on hold for potentially hours. It doesn't put you at the "front of the line" - you're still in the same queue as everyone else, but their system waits in the queue instead of you having to do it yourself. When I used it for my capital loss question, I was able to get a clear explanation from the IRS agent about how to properly fill out Lines 1-3 on the worksheet.

I tried the multiple methods approach and got different answers each time, which is making me even more confused. Does the worksheet split the $3,000 deduction between short-term and long-term losses in a specific way? My losses were all from stock sales if that makes a difference.

The worksheet does handle short-term and long-term losses differently, and that's likely why you're getting different results. For capital losses, there's a specific order of operations the IRS requires. First, short-term losses offset short-term gains. Then, long-term losses offset long-term gains. After that, if you still have net losses in either category, those net losses can offset gains in the other category. Only after all that, if you still have net losses overall, can you deduct up to $3,000 against ordinary income. The worksheet is designed to walk you through this process step by step to ensure the correct ordering. For stock sales, whether they're considered short-term or long-term depends on how long you held them before selling (less or more than a year).

Omg yes this! I was pulling my hair out last year because I was looking at the wrong form entirely when trying to do my capital loss carryover. Make sure you're using the numbers from Schedule D (the summary form) not Form 8949 (where you list all your individual transactions).