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Carryover of Short-Term Capital Loss

jayfreedman052

I had a short-term loss of about $6400 on my 2022 return (filed with FreeTaxUSA), of which $3000 could be claimed and the rest was carried over. I expect to have an additional short-term capital loss this year. Will the 2023 software automatically handle the carryover and additional loss?

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Accepted answers

CoryF

Thank you for this question Jay.

Yes, FreeTaxUSA will carryover the leftover carryover loss that was unused to your 2023 tax return software when you rollover your information from 2022. When you input your 2023 stock sales and cost basis, any loss calculation will add to your carryover losses and be shown on your 2023 Schedule D when you view it. The software will then carry the maximum deductible $3000 loss to the first page of your 2023 Form 1040 as a deduction from total income. The rest will be calculated to carryover to the next tax year.

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CoryF

Thank you for this question Jay.

jayfreedman052

Thank you, Cory. It's what I hoped and expected, but it's good to be sure.

Debsvenus_92

Hello i’ve been doing my taxes on freetaxusa for over six years. I always see my business loss carryover on my federal return and I know that it automatically puts it there from prior years if it’s qualified however I never see it on the state once I get to that part of doing my taxes so now my question is, does it automatically calculate that into my state return as well or do I have to put it in myself?

WrenD

Hello Debsvenus_92,

Great question—and props to you for sticking with FreeTaxUSA so long. You're absolutely right that federal business loss carryovers (like from a Schedule C) are automatically handled by FreeTaxUSA when they’re still valid. However, for state returns, things can get a little trickier because every state treats net operating losses (NOLs) differently.

The software will apply the loss carryover to your state if your state conforms to the federal rules. Since not all states do, though, sometimes the information will be presented and need your attention.

For specific questions about your state and how it is handled, please reach out to Customer Support while logged into your account. They are happy to help!