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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nkyguy1988 t1_j6f0kk8 wrote

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

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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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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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