Capital Loss Carryover Calculator

How Schedule D and the Carryover Worksheet Work

Schedule D splits your sales by how long you held each asset under 26 U.S.C. § 1222. A sale held one year or less goes in Part I (lines 1a to 7) as short-term. A sale held more than one year goes in Part II (lines 8a to 15) as long-term. Gains and losses net inside each part first. To compare tax lots before a sale, use the investment cost basis method calculator.

In Part III, line 16 adds line 7 and line 15 together. When total losses beat total gains, you can deduct the net loss against other income up to the cap on line 21. As IRS Topic No. 409 states: "If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss shown on line 16 of Schedule D (Form 1040)."

Any net loss you cannot deduct this year carries forward to later years under 26 U.S.C. § 1212(b)(1). Carryovers have no time limit while you are alive. Each dollar also keeps its short-term or long-term tag. Your short-term carryover goes on next year's line 6 and offsets short-term gains first. Your long-term carryover goes on line 14 and offsets long-term gains first.

When you figure the carryover, you do not subtract line 21 blindly. Instead, you use the 13-line Capital Loss Carryover Worksheet in the Schedule D instructions. It matches Worksheet 4-1 in IRS Publication 550. The worksheet checks how much of the deduction your taxable income could use, and it uses short-term loss before long-term loss.

Schedule D and Carryover Worksheet Formulas

netResult = shortTerm + longTerm  (Schedule D line 16)
netLoss = max(0, −netResult)
annualLimit = $3,000 ($1,500 if Married Filing Separately, 26 U.S.C. § 1211(b)(1))
deduction = min(annualLimit, netLoss)  (Schedule D line 21)
line 3 = max(0, taxableIncome + deduction)  (26 U.S.C. § 1212(b)(2)(B))
line 4 = min(deduction, line 3)  (deduction absorbed by taxable income)
line 8 (shortTermCarryover) = max(0, max(0, −shortTerm) − (line 4 + max(0, longTerm)))
line 13 (longTermCarryover) = max(0, max(0, −longTerm) − (max(0, shortTerm) + max(0, line 4 − max(0, −shortTerm))))
totalCarryover = shortTermCarryover + longTermCarryover

Worked Capital Loss Carryover Examples

Default case (both short-term and long-term losses): Suppose you file Single with −$10,000 on Schedule D line 7, −$2,000 on line 15, and $47,000 on Form 1040 line 15. Your net loss on line 16 is −$12,000, and your line 21 deduction is $3,000. On the worksheet, line 3 is $50,000 and line 4 is $3,000. Short-term loss ($10,000 on line 5) uses the whole $3,000 deduction, leaving $7,000 on line 8 as short-term carryover. Because line 11 is zero, all $2,000 of long-term loss stays on line 13, for $9,000 in total carryover.

IRS Publication 550 example (Bob and Shelly): Bob and Shelly file a joint return with a $7,000 capital loss and $26,000 of taxable income. They claim the $3,000 deduction on Schedule D line 21 and carry $4,000 to the next year.

Cross-offset example (short-term gain with long-term loss): Suppose you have a +$4,000 net short-term gain on line 7 and a −$9,000 net long-term loss on line 15, with positive taxable income. Line 16 nets to a −$5,000 loss. After the line 21 deduction, worksheet line 8 is zero and line 13 leaves $2,000 of long-term carryover.

Assumptions, Scope & Annual Limits

• Calculations follow 26 U.S.C. §§ 1211(b), 1212(b), and 1222, the 2025 Schedule D instructions (page 10), and IRS Publication 550 (2025).
• The yearly deduction caps of $3,000 and $1,500 in 26 U.S.C. § 1211(b)(1) are fixed by law. They do not adjust for inflation.
• Taxable income on Line 1 of the worksheet comes from Form 1040 line 15 after the line 21 deduction. Enter a negative number when your deductions beat your gross income.
• Your entries for Schedule D line 7 and line 15 must include any carryovers brought in from prior years on lines 6 and 14.
• Collectibles (28% rate) gain or loss, section 1250 (25% rate) gain, and corporate capital losses under 26 U.S.C. § 1212(a) are not modeled here.

These figures are estimates for learning and planning, not financial, tax, legal or investment advice. Terms of use.

What to Do With Your Capital Loss Carryover

Copy Worksheet Line 8 to next year's Schedule D line 6 for your short-term carryover. Copy Line 13 to next year's line 14 for your long-term carryover. Save your Schedule D and worksheet with your tax records so you can prove the balance in later years.

Fill out the carryover worksheet even in a low-income year when you owe $0 in tax. Under 26 U.S.C. § 1212(b), your carryover drops by the deduction your adjusted taxable income could use (up to $3,000, or $1,500 if filing separately). Skipping the deduction when you had positive taxable income forfeits that part of the carryover.

Check the 10-year table above before taking more losses at year-end. If your carryover is $30,000, the $3,000 yearly cap takes 10 years to use it up unless you realize capital gains. Capital gains use up your carryover dollar for dollar with no yearly cap.

Capital Loss Carryover Questions