Asked in Tax Law for Arkansas

Q: If I am tax exempt with capital loss outweighing my ordinary income, do I still get money back at the end of the year?

Example: Ordinary income,12k. Capital loss, 24k.

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1 Lawyer Answer
Eric  Day
Eric Day
  • Tax Law Lawyer
  • Henderson, NV

A: You can only use Capital Losses to offset capital gains. If you don’t have any capital gains, you can write off $3,000 per year until you either have enough capital gains to offset the remaining loss or you exhaust the whole capital loss using the $3,000 per year. In your example only $3,000 of the capital loss will be used against that ordinary income with the remaining $21,000 being carried forward to next year. You would still technically have income of $9,000. You may not owe tax because the standard deduction would wipe that gain out.

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