prior year investment loss vs current year gain

Submitted by Team_Tamales t3_10ojk9z in personalfinance

I lost just over 20k in the stock market in 2022. I know there is a limit to what I can count in loss towards my 2022 taxes. My question is can the 2022 loss offset 2023 market gains?

For example say I sell and have 15k in capital gains can I offset this with the prior years losses to remove the tax burden for 2023?

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Werewolfdad t1_j6f086v wrote

Losses from prior years are carried forward yes

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michaelindc t1_j6f0tdz wrote

Yes. Furthermore, you can deduct $3K of the 2022 investment losses from your ordinary income on your 2022 return, and carry the remaining $17K in losses forward to 2023 and future years until you've deducted the entire $20K.

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nkyguy1988 t1_j6f0kk8 wrote

Assuming you mean realized losses, yes, those get carried forward.

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Team_Tamales OP t1_j6f4vqs wrote

Yes these are realized, thanks!

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Upset-North-2211 t1_j6fruek wrote

Keep track of these losses ad you can use them in the future to offset any gains. These losses never expire, but you have to keep track and enter them on your tax returns.

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Default87 t1_j6ffish wrote

Assuming the losses were realized, yes what carries forward can ( and will ) offset future realized gains. Depending on your income level, you probably don’t want to be going out of your way to generate realized gains to burn through the carried losses.

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