I understand it can be done... I don't need to know that.
...But I don't understand the mechanism used to track and carry over the capital losses for future years...
I am entering my stock trades into the software and it is taking all of them without warning. Say, 30K in gains and 15K in losses. I am limited to deducting $3000 in losses, but I do not understand:
-Does the software want me to enter all of my losses for that year and its magic only deducts the eligible $3000?
-Am I only supposed to enter $3000 worth of losses?
-If I enter them all for the year, does the software track the remaining deductible value and enter them when I load up the previous year's taxes into the next year's filing?
-Am I supposed to track the losses myself forever?... and in future years, identify those shares?
I get a little confused, because when I start deleting bits of the 15K of losses, my tax goes up... That says to me that the number I owe, has taken into consideration the entire 15K of losses... I would think if that software was considering only the 3K deduction, it would keep my tax the same until I deleted 12K of losses?
I can't find anything anywhere about how to specifically execute this, only that "it is allowed"...
To be clear, I am entering the 2020 gains/losses now, and will be carrying over losses next year(and on)...