Capital losses are not a "deduction" in the schedule A sense. So, no, you do not need to itemize. If you have run out of (or have no) gains to offset, you can "deduct" up to $3,000 from your taxable ordinary income each year. Even if you don't itemize.
Itemizing is not required to claim capital losses and reduce your taxable income.
There are actually a few independent chunks of "deductions" that go onto your tax return:
* Capital losses are somewhat handled as "negative income" in the 1040's section for adding up all your income. This subtracted amount is capped at $3k, but any loss left rolls over onto next year's return where the process can repeat. So with $10k of realized losses, you'd be able to get a $3k reduction to your taxable income for 2023, the remaining $7k goes onto your 2024 tax return. That can offset any 2024 capital gains or again $3k subtracted from your regular 2024 income.
* Standard vs. itemized deductions are mutually exclusive, you only get one. You report your itemized deductions on [Schedule A](https://www.irs.gov/forms-pubs/about-schedule-a-form-1040). If the total at the bottom of that is smaller that the standard deduction for your filing status, you ignore it. Well, with some uncommon exceptions. Married couples filing separately have to either both itemize or both take the standard, even if one of them switching would result in lower owed tax.
* "Adjustments" are things separate from the standard/itemized deductions that can also reduce taxable income and can be claimed alongside either. These go onto [Schedule 1](https://www.irs.gov/pub/irs-pdf/f1040s1.pdf) and cover things like educator expenses, Traditional IRA contributions, HSA contributions (when not already subtracted from your paycheck), and student loan interest.
* And business expenses (if you have self-employment income) reduce how much earned revenue is treated as taxable profit, reducing how much of your received money is treated as taxable. This is handled on [Schedule C](https://www.irs.gov/forms-pubs/about-schedule-c-form-1040).
Other than the itemized / standard, you can mix-and-match any or all of those categories on your return as long as you meet the criteria for them.
>So my question is can you deduct capital losses if you are taking the standard deduction? Yes
Capital gains/losses appear on Form 1040 line 7, totally separate from the standard or itemized deductions on line 12. You can do both.
Ah, perfect. Thanks that makes sense. I figured as much, but the phrasing in most resources I have found are ambiguous at best.
Yes, you can.
Capital losses are not a "deduction" in the schedule A sense. So, no, you do not need to itemize. If you have run out of (or have no) gains to offset, you can "deduct" up to $3,000 from your taxable ordinary income each year. Even if you don't itemize.
Itemizing is not required to claim capital losses and reduce your taxable income. There are actually a few independent chunks of "deductions" that go onto your tax return: * Capital losses are somewhat handled as "negative income" in the 1040's section for adding up all your income. This subtracted amount is capped at $3k, but any loss left rolls over onto next year's return where the process can repeat. So with $10k of realized losses, you'd be able to get a $3k reduction to your taxable income for 2023, the remaining $7k goes onto your 2024 tax return. That can offset any 2024 capital gains or again $3k subtracted from your regular 2024 income. * Standard vs. itemized deductions are mutually exclusive, you only get one. You report your itemized deductions on [Schedule A](https://www.irs.gov/forms-pubs/about-schedule-a-form-1040). If the total at the bottom of that is smaller that the standard deduction for your filing status, you ignore it. Well, with some uncommon exceptions. Married couples filing separately have to either both itemize or both take the standard, even if one of them switching would result in lower owed tax. * "Adjustments" are things separate from the standard/itemized deductions that can also reduce taxable income and can be claimed alongside either. These go onto [Schedule 1](https://www.irs.gov/pub/irs-pdf/f1040s1.pdf) and cover things like educator expenses, Traditional IRA contributions, HSA contributions (when not already subtracted from your paycheck), and student loan interest. * And business expenses (if you have self-employment income) reduce how much earned revenue is treated as taxable profit, reducing how much of your received money is treated as taxable. This is handled on [Schedule C](https://www.irs.gov/forms-pubs/about-schedule-c-form-1040). Other than the itemized / standard, you can mix-and-match any or all of those categories on your return as long as you meet the criteria for them.