I have no taxable income but I have capital losses. Can I still deduct $3,000 limit and get a refund?
No. Even if you have a net loss, your refund is limited to the amount of tax that was withheld from your income (none, if you have no income), the amount of any refundable credits (probably also not applicable if you have no taxable income) and the amount of any estimated tax payments you made. You will not receive a refund with the loss if you would not have received a refund without it. However, you should file a return and claim the loss. The amount IN EXCESS OF $3000 will be carried over to a future year when you might have taxable income and might benefit you then.
If I have a ST capital loss with no earned income, do I still need to file?
You should file since the only information that the IRS has is the sales price of the security. They will assume that it's all profit if you don't report it on Schedule D. Any loss that you cannot use against other income in the year of the loss is carried forward to future years where it's first used against capital gains (without limit) and then in $3,000 chunks against other income.
Download appropriate form of filing return of income tax ITR2 or ITR 4 depending on whether you have only capital gains income or some income falling in business/ profession. Following table will helpOnly Short Term Gains, on shares held for less than 12 months- Capital Gains= Form required is ITR2Long Term Capital Gains- I.e. profit on sale of shares after holding for 12 months and more- Capital Gains-Form required is ITR2Frequent sales / purchase of shares, falling in nature of adventure in nature of trade/business- Business Income- form required ITR4In case of income falling under business/ profession head, deduction of relevant expenses as STT or others as may be incurred is allowedFiling of form is simple and instructions on the form are helpful. This link may help. However in case you need further help, please ask again here, will help
Capital losses with limited income?
You must file a tax return showing the capital loss carryover from the previous year. This is the only way to keep carrying over the loss to finally have the tax advantage of using the losses. When you have no or very little income this is all taken into consideration when you prepare the capital loss carryover worksheet for each year. I have referenced the Sch. D instructions below. Page D-7 has the carryover worksheet. Beginning with line 1, your taxable income is taken into consideration to determine how much of your loss you are allowed to carryover to the next year. Laura H – H&R Block – Senior Tax Advisor 5 **This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.
In the United States, if you have no earned income, no unearned income, and no withholdings or other prepayments to have refunded, you do not need to file a return. You can, of course, file a return with every line blank or zero, if you want, but you do not have to.If you have no earned income but significant unearned income (how much is “significant” will depend on whether someone else can claim you as a dependent, on whether or not you are married, how old you are, and possibly other factors), you will need to file a return on the form appropriate to the nature of your income and your “filing status”. Some forms of unearned income can be reported on Form 1040-EZ or Form 1040A but most require Form 1040, as the required lines to report most forms of unearned income are simply absent on the simplified 1040A and 1040-EZ forms.
Do I have to file taxes for capital loss carryover?
Yes, but not for the reason that you gave. If you have a capital loss and do not file, then the IRS treats the basis as zero, which means that you have a gain of however much you received for the sale, and you have to pay capital gains tax on that amount. The only way to avoid paying this tax (which you don't really owe) is to file, and claim the correct basis. The IRS computers do not automatically recognize the transaction as being a loss and not a gain until you file.
If I do not file taxes (no income to claim) must I still declare Capital Gains?
Yes, you will need to file a return. If you plan on gains and losses from stock, you will likely need to submit form 1040 which includes the details of your stock transactions. If you buy and sell stock in less than 24 months, you report the gain and it is taxed at your income level. If you hold it longer, the tax rate is lower. Keep in mind this may change based on tax legislation. One thing to consider. Perhaps instead of stocks, you might consider Mutual Funds. If you buy mutual funds, you'll often get interest or dividends which are subject to reporting limitations (if you get less than $300, for instance, you aren't required to file. I can't remember the exact amount but the forms have it). They also submit form 1099's which report the total capital gains which is allowable typically by the form 1040A. The 1040A is simpler and shorter than the 1040. If you buy and sell stocks then you'll need to account for every part of every transaction and then carry forward the gain or loss to the tax form. I've not filed the 1040a in about 15 years so i honestly can't remember if there is a similar worksheet for stocks; hence my thinking it will be a 1040. So, again, to your question, if you buy and sell stocks, yes, you will need to file. Hope that helps.