Discussion:Dependent return with loss carryfoward
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Current revision Tiredoftaxes (Talk | contribs) (Thanks for your) |
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| Or, you could just do the return and not file it, so you can calculate the Carryover Worksheet for use on their 2009 return.}} | Or, you could just do the return and not file it, so you can calculate the Carryover Worksheet for use on their 2009 return.}} | ||
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| + | {{ForumReplyPost|UserID=Tiredoftaxes|Date=4 March 2009|Text=Thanks for your help. Yes, I did put the information on ProSeries and that is what perplexed me. It showed the carryforward loss being reduced by the capital gain. I had $111 interest and $54 dividends and capital loss of $3000(Total of $3265 after netting 2007 loss carryfoward of $3363 with capital gains of $98 on Schedule D) on page 1 of 1040, bringing AGI to -2835. Then the standard deduction was $900, bringing line 41 to -$3735 and then taxable income to 0. But the loss carryover to 2009 worksheet brings it down to $3265. Just doesn't make sense. I would have thought that the loss carryfoward to 2009 would have been the original amount($3363) since the AGI was less than the standard deduction and none of it needed to be used.}} | ||
Current revision
Discussion Forum Index --> Basic Tax Questions --> Dependent return with loss carryfoward
Discussion Forum Index --> Tax Questions --> Dependent return with loss carryfoward
Tiredoftaxes (talk|edits) said: | 3 March 2009 |
| I have a client whose child was required in 2007 to file a tax return because he had gross proceeds from sale of stock over $7000. The 2007 return was filed with a 2008 loss carryfoward of $3363. In 2008, the child only had dividend income of $53, Capital gain income of $97 and interest income of $111. All that is below the filing threshold for a dependent in 2008. Do I need to file a return to keep the loss carryforward going?
Also, when put information on return, the Capital gain of $97 gets netted with the loss carryfoward of $3363 on schedule D. That then reduces carryfoward to 2009 to $3266. But that doesn't make sense since the tax is zero and none of the loss is needed to be used. What am I missing. Any help would be appreciated. | |
| 3 March 2009 | |
| There isn't a filing requirement if a taxpayer has a capital loss carryforward. The carryforward can be used on future returns, even if returns inbetween weren't filed because they weren't required to be filed.
However, when the carryforward is used in future returns, the amount must be calculated as if the returns not filed in fact were filed. Pub 550 (pg 66): When you figure the amount of any capital loss carryover to the next year, you must take the current year's allowable deduction into account, whether or not you claimed it and whether or not you filed a return for the current year. I'll explain... Is the "child" still a dependent of your client for the 2008 return? If not, the child's return must use a capital loss before using the child's personal exemption. If they are a dependent, there of course is no personal exemption to use up. This can cause erosion against the carryforward. Also, sometimes, it can appear that a capital loss carryover is being used, when it really might not be. Working through the Capital Loss Carryover Worksheet on the Sch D instructions may calculate the carryforward isn't reduced, even it looks like it is on Sch D and the 1040. (Not sure if you did the quick subtraction of $97 from $3363 to get the $3266 value, or whether you prepared the return and it actually calculated the Carryover Worksheet information to show it was going to be reduced.) You could file the return, just so it's filed and the statute of limitations starts ticking. Or, you could just do the return and not file it, so you can calculate the Carryover Worksheet for use on their 2009 return. | |
Tiredoftaxes (talk|edits) said: | 4 March 2009 |
| Thanks for your help. Yes, I did put the information on ProSeries and that is what perplexed me. It showed the carryforward loss being reduced by the capital gain. I had $111 interest and $54 dividends and capital loss of $3000(Total of $3265 after netting 2007 loss carryfoward of $3363 with capital gains of $98 on Schedule D) on page 1 of 1040, bringing AGI to -2835. Then the standard deduction was $900, bringing line 41 to -$3735 and then taxable income to 0. But the loss carryover to 2009 worksheet brings it down to $3265. Just doesn't make sense. I would have thought that the loss carryfoward to 2009 would have been the original amount($3363) since the AGI was less than the standard deduction and none of it needed to be used. | |
