Today TaxMama hears from Geraldine in the Tax Parlor, who asks “Can I bring over a $3,000 loss from 2004 return without filing a 2005 return, since he did not have any earn income – only social security for 2005?”
Hi Geraldine,
Personally, I ALWAYS advise my clients to file tax returns for each year, even if they don’t have to. After all, IRS or the state can come along years later and say there was income – and since there’s no statute of limitations – he’d have non-filing penalties, non-payment penalties and more. This way, I close the year against the statute and future claims. Or file and get CP-2000 notices about unreported income.
In fact, for my seniors without enough income to file, I prepare the return for free (unless they insist on paying).
Why not do the simple return for nothing?
Then, carry the resulting capital loss forward into the new return.
It’s clean. Avoids potential errors. It’s easy to do. And you’re a hero!
And remember, you’ll find answers to lots of questions about capital loss carryovers and other tax information, free. Where? At TaxMama.com
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