What happens to my basic capital loss carryover when I have future gains?

Capital losses don't just disappear if you have gains in the following year - they get applied to those gains. Here's how your scenario would work: 2023: You have a $10,000 capital loss. You can deduct $3,000 against ordinary income, leaving $7,000 to carry forward. 2024: You have $20,000 in capital gains. The $7,000 loss carryover from 2023 gets applied against these gains, reducing your net capital gain to $13,000 ($20,000 - $7,000). This is what you'll pay taxes on for 2024. Since your entire loss carryover was used up in 2024, there's nothing left to carry forward to 2025. The $7,000 didn't make it to 2025 because it offset part of your 2024 gains.

I used to struggle with figuring out all my capital gains and losses too, especially with multiple years of trading. I finally got fed up with trying to track everything manually and found this tool at https://taxr.ai that analyzes all your capital transactions automatically. It identified several wash sales I had completely missed and showed me exactly how my loss carryovers were being applied. What's really helpful is that it actually explains the tax rules while it processes your documents, so you learn how everything works instead of just getting numbers. And it lets you model different scenarios (like your multi-year situation) to see how different trading decisions would affect your taxes.

Guys I just tried that taxr.ai site mentioned above and it was exactly what I needed for my crypto mess! I uploaded my transaction history from Coinbase and Binance and it immediately identified all my short vs long term gains, wash sales, and even showed me which specific transactions led to the biggest tax hits. What really surprised me was discovering I had about $4,300 in loss carryovers I didn't even know about from some failed NFT investments last year. Now I know exactly how those will offset my gains this year. The visualization of how losses get applied over multiple years finally made this whole capital loss carryover thing make sense to me.

If you're really stuck on tax questions like this and need to speak with someone at the IRS (which is nearly impossible these days), I found a service called Claimyr that got me through to an actual IRS agent in about 15 minutes instead of waiting for hours. Check it out at https://claimyr.com - they have a video explaining how it works here: https://youtu.be/_kiP6q8DX5c I was totally confused about how my capital losses were being carried forward, especially after I had done a Roth conversion that changed my overall tax situation. The IRS guidance online was super unclear and I needed to speak to someone directly. After trying for days to get through the normal way, I tried Claimyr and finally got clear answers.

I have to apologize to everyone for my skepticism earlier. After two failed attempts to reach the IRS about my capital loss carryover questions (got disconnected after 90+ minutes both times), I broke down and tried the Claimyr service. It actually worked exactly as promised. I got a text when they reached an agent, jumped on the call, and finally got clear answers about my capital loss situation. The agent confirmed everything that was said above about losses having to be used against the next year's gains. He also pointed me to some specific forms I needed to file to properly document my carryover. Definitely learned my lesson about being too quick to dismiss something that sounds too good to be true. In this case, it actually delivered.

Something important nobody mentioned yet: make sure you're tracking the difference between short-term and long-term capital losses/gains. They get treated differently! Short-term losses first 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. This ordering can make a big difference in your tax bill since short-term gains are taxed at your ordinary income rate while long-term gains get the preferential capital gains rate. In your example, if your $10,000 loss in 2023 was short-term, it would first offset any short-term gains in 2024 before offsetting long-term gains.

Has anyone used the IRS's own free tax portal to help with capital gains reporting? I'm wondering if it handles carryovers well or if it's better to use a paid service.

One thing that might help clarify the carryover process is understanding that it's actually quite systematic. The IRS requires you to use Form 8949 and Schedule D each year to track your capital gains and losses, and these forms automatically calculate how much of your prior year losses get applied to current year gains. The key point everyone's making is correct - you can't strategically save losses for future years. The tax code forces you to apply them in order: first against the same type of gains (short-term losses against short-term gains, long-term against long-term), then cross-category if needed, and finally up to $3,000 against ordinary income. What's really helpful is keeping good records year over year. I maintain a simple spreadsheet tracking my total loss carryovers from each year so I can verify the tax software is calculating everything correctly. This has caught a few errors where the software didn't properly import my prior year carryover amounts. For your specific situation with the $7,000 carryover, yes it would be completely used up in 2024 against your $20,000 gains, leaving nothing for 2025. The math is straightforward once you understand the rules!

Just want to add one more important point that might not be obvious to newer investors: the order of loss application can sometimes work in your favor tax-wise, even though you can't control the timing. Since capital losses must be applied against gains before you can take the $3,000 ordinary income deduction, having gains in subsequent years actually maximizes the tax benefit of your losses. This is because capital gains are often taxed at preferential rates (0%, 15%, or 20% for long-term gains depending on your income), while the $3,000 deduction against ordinary income saves you money at your marginal tax rate (which could be 22%, 24%, 32%, etc.). So in your scenario, Isabella, using that $7,000 loss against your $20,000 in gains in 2024 likely saves you more in taxes than if you could somehow spread it out as $3,000 deductions against ordinary income over multiple years. The system is actually designed to be more beneficial this way, even though it might not feel like you have control over the timing. This is why some tax professionals actually recommend "tax loss harvesting" strategies where you intentionally realize losses in down years to offset future gains - the losses are often more valuable when applied against gains rather than ordinary income.