i'VE BEEN DOING my tax's for years but this year ( 2022 ) line 7 reads a little differently. I can't get a response from IRS web site, nor phone, so i will try my luck here and maybe just someone, or CPA might shed some light to my confusion with that
line.With my calculations I am entering for the first time a capital loss which limits me to $3000 per year. If i enter that loss on line 7, line 8 says to add ( key word ADD ) to all the above other figures that would eventually create my taxable income.
I could not see where after that entry, am able to deduct that $3000. Am i missing something here?

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Noel, I think what you are missing is that a net capital loss of $3000 is entered on line 7 as follows:

(3000)

In the language of tax forms (and accounting), the //parentheses// represent an instruction to count the number in the parentheses as a //negative number//. When a subsequent line (like line 9) says to add what is on line 7 to what is on other lines, and
line 7 has a number in parentheses, the tax preparer or tax software is adding a negative number to the other numbers.

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On Sunday, February 26, 2023 at 6:58:32 PM UTC-5, Elle N wrote:

Noel, I think what you are missing is that a net capital loss of $3000 is entered on line 7 as follows:

(3000)

In the language of tax forms (and accounting), the //parentheses// represent an instruction to count the number in the parentheses as a //negative number//. When a subsequent line (like line 9) says to add what is on line 7 to what is on other lines,

and line 7 has a number in parentheses, the tax preparer or tax software is adding a negative number to the other numbers.
Correct me if I'm wrong, but the instructions say to enter that loss as a positive number and that is where my confusion comes in. To me that means no minus line or parenthesis

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On Monday, February 27, 2023 at 9:05:10 AM UTC-6, Noel wrote:

On Sunday, February 26, 2023 at 6:58:32 PM UTC-5, Elle N wrote:

Noel, I think what you are missing is that a net capital loss of $3000 is entered on line 7 as follows:

(3000)

In the language of tax forms (and accounting), the //parentheses// represent an instruction to count the number in the parentheses as a //negative number//. When a subsequent line (like line 9) says to add what is on line 7 to what is on other lines,

and line 7 has a number in parentheses, the tax preparer or tax software is adding a negative number to the other numbers.

Correct me if I'm wrong, but the instructions say to enter that loss as a positive number and
that is where my confusion comes in. To me that means no minus line or parenthesis

I believe what you are referencing is this instruction on Schedule D itself, Line 21:

--------start quotation--------------
"If line 16 is a loss, enter here and on Form 1040, 1040-SR, or 1040-NR, line 7, the smaller of:

• The loss on line 16; or

• ($3,000), or if married filing separately, ($1,500)

Note: When figuring which amount is smaller, treat both amounts as positive numbers."
-----------end quotation------------

Translating this instruction, and the other instructions for Schedule D, correctly and quickly requires some experience. Here's the deal:

The loss one reports on Form 1040-SR Line 7 will be reported as I indicated earlier: By a number in parentheses. The parentheses signify that the line entry is to be treated as a negative number.

Example:
Suppose Sch D Line 16 is (4200) = -4200 = negative 4200. What should be entered on Sch D, Line 21? The instructions say to treat the "(4200)" as a positive number. Compare the 4200 to the 3000. Which is smaller? The 3000 is smaller. Hence on Line 21, one
enters (3000) = -3000 = negative 3000. T

he point of this computation is to apply the tax code that limits a taxpayer to a maximum of $3000 of capital loss in any tax year.

Are you completing your tax returns using pen, paper and a hand-held calculator? Or are you using software? Let me urge switching to software. Tax law is now so complicated, even for those who are numerically literate.

For incomes below a certain level, the online software and filing is free. Ask if you want more information.

You figured out how to post here. I bet you can figure out the software. If you doubt the software, you can do your own checks on its results.

I have been helping people with their taxes via VITA for some years now. I used to try to be able to explain every line to clients. Today this is simply not practical. The algorithms for many of the lines are just too complex. They typically refer to
multiple other worksheets, forms and instructions.

I was going to start saying to taxpayers, "The algorithm is too complex to explain in one sitting. Plus we have clients waiting." And the truth is, even if I explained it, they would not //learn// what I was (for all intents and purposes) babbling about.
I believe most VITA taxpayers do not even know what an "algorithm" is.

It sucks eggs that the IRS is stuck implementing the law but not making it easy for taxpayers to understand. I figure things will only get worse.

Do consider taking future tax questions to the misc.taxes.moderated forum. Posters there are excellent and well-seasoned.

--- SoupGate-Win32 v1.05
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On Monday, February 27, 2023 at 12:47:28 PM UTC-5, Elle N wrote:

On Monday, February 27, 2023 at 9:05:10 AM UTC-6, Noel wrote:

On Sunday, February 26, 2023 at 6:58:32 PM UTC-5, Elle N wrote:

Noel, I think what you are missing is that a net capital loss of $3000 is entered on line 7 as follows:

(3000)

In the language of tax forms (and accounting), the //parentheses// represent an instruction to count the number in the parentheses as a //negative number//. When a subsequent line (like line 9) says to add what is on line 7 to what is on other

lines, and line 7 has a number in parentheses, the tax preparer or tax software is adding a negative number to the other numbers.

Correct me if I'm wrong, but the instructions say to enter that loss as a positive number and
that is where my confusion comes in. To me that means no minus line or parenthesis

I believe what you are referencing is this instruction on Schedule D itself, Line 21:

--------start quotation--------------
"If line 16 is a loss, enter here and on Form 1040, 1040-SR, or 1040-NR, line 7, the smaller of:

• The loss on line 16; or

• ($3,000), or if married filing separately, ($1,500)

Note: When figuring which amount is smaller, treat both amounts as positive numbers."
-----------end quotation------------

Translating this instruction, and the other instructions for Schedule D, correctly and quickly requires some experience. Here's the deal:

The loss one reports on Form 1040-SR Line 7 will be reported as I indicated earlier: By a number in parentheses. The parentheses signify that the line entry is to be treated as a negative number.

Example:
Suppose Sch D Line 16 is (4200) = -4200 = negative 4200. What should be entered on Sch D, Line 21? The instructions say to treat the "(4200)" as a positive number. Compare the 4200 to the 3000. Which is smaller? The 3000 is smaller. Hence on Line 21,

one enters (3000) = -3000 = negative 3000. T

he point of this computation is to apply the tax code that limits a taxpayer to a maximum of $3000 of capital loss in any tax year.

Are you completing your tax returns using pen, paper and a hand-held calculator? Or are you using software? Let me urge switching to software. Tax law is now so complicated, even for those who are numerically literate.

For incomes below a certain level, the online software and filing is free. Ask if you want more information.

You figured out how to post here. I bet you can figure out the software. If you doubt the software, you can do your own checks on its results.

I have been helping people with their taxes via VITA for some years now. I used to try to be able to explain every line to clients. Today this is simply not practical. The algorithms for many of the lines are just too complex. They typically refer to

multiple other worksheets, forms and instructions.

I was going to start saying to taxpayers, "The algorithm is too complex to explain in one sitting. Plus we have clients waiting." And the truth is, even if I explained it, they would not //learn// what I was (for all intents and purposes) babbling

about. I believe most VITA taxpayers do not even know what an "algorithm" is.

It sucks eggs that the IRS is stuck implementing the law but not making it easy for taxpayers to understand. I figure things will only get worse.

Do consider taking future tax questions to the misc.taxes.moderated forum. Posters there are excellent and well-seasoned.

Thank you.....Yes, I am one of those who use pen,paper and calculator and enjoy doing it all these years, even with the snags. Like you said each year the forms get more complex. I considered software, but am always denied because of my AGI. For 2022 tax
i may just be able to use software and do my own to check it out. I will check out that link you offered.

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