After looking around the net for a simple definition I turn here for an answer. Each year as I prepare my taxes I see references to something called "carryovers" (i.e. carryover worksheet). My failed research seems to indicate that there are two categories: loss carryovers and charitable contribution carryovers. Unfortunately I can't find an answer that starts at the beginning.Can someone please define for me what a carryover is (particularly as related to charitable contributions)? Also, are there additional types of carryovers?BLs
Carryovers exist because there are maximum values for some items. For example, you can use capital losses to offset capital gains in the current year, and if your losses exceed your gains, you can apply up to $3,000 of your losses to ordinary income. But what if your capital losses exceed your capital gains by $15,000? Well, you use $3,000 as above, and the remaining $12,000 loss is carried forward to the following year. Actually, you carry forward two varieties of capital loss: long-term and short-term. Capital losses can be carried forward indefinitely.Charitable contributions are limited as well, to 20%, 30%, or 50% or AGI, depending on the type of asset being contributed. If your contribution exceeds the limit, you can carry forward the excess to a subsequent year, just as you carry forward a capital loss. Carryover for charitable contributions is limited to 5 years, however. See Publication 526.
Can someone please define for me what a carryover is (particularly as related to charitable contributions)? Also, are there additional types of carryovers?There is no limit placed on how much you can contribute to charity in a given year, but there is a limit on how much you can deduct on your tax return. Generally, it is 50% of your AGI, but under certain conditions the limit is less. If you are particularly generous one year, or your AGI drops suddenly, you may exceed the 50% limit. If you do, you can carry the unused deductions forward to the next year. For charitable contributions, you can bring forward an unused balance for up to 5 years.Other carryforwards are net operating loss, capital loss, investment interest expense, passive activity losses, and a variety of credits.Ira
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