Hi there!

I have about 85K in LT capital losses carryforward from previous years. This year I was married, and my wife is going to be recognizing about 70k in LT capital gains for the 2015 year. If I am understanding IRS publication 536 correctly, I am not able to use my capital losses to offset her capital gains, correct? How am I supposed to keep our capital lossses/gains separate on the tax return if we file jointly, is there a worksheet available? I usually file via TaxAct, is there another service that would be better to use? Thanks so much for your help in advance!!

Ryan

I have about 85K in LT capital losses carryforward from previous years. This year I was married, and my wife is going to be recognizing about 70k in LT capital gains for the 2015 year. If I am understanding IRS publication 536 correctly, I am not able to use my capital losses to offset her capital gains, correct? ==========================>Why not? you can offset your wife's LTCG with your LTCL. As you were married in 2015 and can file your return as MFJ with your spouse, you must include both your losses and your spouse's gains when figuring your LTCL. For example, as you have a $85K LTCL but your spouse has $70K of LTCG, your loss is used up to $70K when you file a joint return. So, you still carry $15K of LTCL and then, on
Form 1040 Sch D, you also subtract $3K of your loss of $20K from ordinary income, leaving you with a carry forward of $17K indefintely .
But, if your spouse has $20K in LTCL and you have $5K in LTCG, you have a $15K LTCL . Since you can deduct $3K of the excess losses on your tax return, you can carry over the remaining $12K to your next joint return the following year.

However, you cannot use losses on assets held in your retirement plans, I,e., traditional IRAs, 401(k), or Keogh plans and other tax-deferred retirement accounts to offset your LTCG gains since Capital gains and losses in these retirement accounts are NOT taxed/offset.

How am I supposed to keep our capital lossses/gains separate on the tax return if we file jointly, is there a worksheet available? I usually file via TaxAct, is there another service that would be better to use=======>>I guess there are tens of tax return software programs to deal with LTCL carryover. You may need to contact a vendor for more info in detail on specific computer software program for LTCL C/O or etc.

==========================>Why not? you can offset your wife's LTCG with your LTCL.


Are you sure about that? IRS Publication 536 states "If you and your spouse were not married to each other in all years involved in figuring NOL carrybacks and carryovers, only the spouse who had the loss can take the NOL deduction. If you file a joint return, the NOL deduction is limited to the income of that spouse."

Publication 536 (2014), Net Operating Losses (NOLs) for Individuals, Estates, and Trusts

IRS Publication 536

Change in Marital Status

If you and your spouse were not married to each other in all years involved in figuring NOL carrybacks and carryovers, only the spouse who had the loss can take the NOL deduction. If you file a joint return, the NOL deduction is limited to the income of that spouse.


Publication 536 (2014), Net Operating Losses (NOLs) for Individuals, Estates, and Trusts