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BK-CPA, Certified Public Accountant (CPA)
Category: Capital Gains and Losses
Satisfied Customers: 933
Experience:  Owner of a CPA firm
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My last 2 1040 Tax returns greatly differed in their

Customer Question

My last 2 1040 Tax returns greatly differed in their calculation of schedule D for capital gains even though the amounts were not far off. It seems that the latest one might be incorrrect. Could you help?
Submitted: 1 year ago.
Category: Capital Gains and Losses
Customer: replied 1 year ago.
on my 2013 1040 Tax for Schedule D, Line 1a=235; line 7=235; line 8a= -449; line 9=34,048; line 13=3,614;line 14= -33,055 ; line 15= 4,158 and line16= 43,393.
on my 2014 1040 Tax return lineb1a= 4; line7= 4; line 8a= -343; line 9= 26,280; line 13= 1,961; line 5= 27,898 and line 16= 27,902. Why is there such a difference, please?
Customer: replied 1 year ago.
Excuse me, a correction on Tax 2013 for line is 4,393. thank you.
Expert:  BK-CPA replied 1 year ago.

Hello and thank you for your question.

In 2013, you had a large capital loss carryover from the prior year showing (line 14). This amount was subtracted from your 2013 long-term capital gains to arrive at net long-term capital gain on line 15.

In 2014, you had no capital loss carryover from 2013 (and line 14 was $0) because in 2013 you ended up with net capital gains so there was no loss to carry forward.

Note that capital losses in excess of capital gains must be carried forward to future years with the exception that $3,000 per year can be deducted. If you look at your 2012 return, you will find that you deducted $3,000 on page 1 of your Form 1040 and were forced to carry forward to 2013 $33,055 in capital losses. Because you had more than $33,055 in capital gains during 2013, you were able to use up all of your capital loss carryover from 2012. You again had some capital gains in 2014, but no longer had any loss carryover, so line 16 for 2014 is much larger than line 16 from 2013.

I hope this helps.

Customer: replied 1 year ago.
Thank you for your explanation, our accountants never explained it. This information is needed for our application to healthcare form the government (Obamacare). I hope we are not disqualified. Money we subtract monthly from this account will be listed as "income investments" rather than "savings" although there is a section for "capital gains".
Expert:  BK-CPA replied 1 year ago.

Removing money from your investment account is not a taxable event. Gains, losses, interest, and dividends are, and they all will impact your eligibility to receive a premium tax credit from the Marketplace. Investment income can be difficult to predict, especially with mutual funds, so you should monitor your investments' performance throughout the year and update your projected income on the Marketplace's website to ensure you are not receiving too much or too little of a credit.

If you found this helpful, please kindly take a minute to rate my response. Thank you!

Expert:  BK-CPA replied 1 year ago.

I just wanted to follow up with you. Is there anything more I can help you with on this question? If not, please kindly take a moment to rate my response. Thank you!

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