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Dear Tax Talk,

I’m a senior widow who has been doing taxes with tax software for many years. During the past several years, I’ve been able to use a capital loss carryover, but that will end this year. I am fearful that my ordinary taxes will increase this year and in the future by the $3,000 carryover amount that I used in past years to decrease my tax bill. I understand that my tax bill will now go up, but will it go up $3,000?

In other words, as the seeming “luxury” of the carryover deduction is done, does that mean I am in for a whopping increase in my ordinary tax bill this year, all other things being equal?

Yes, this is a naive question. I guess I’m getting too old for these kinds of calculations, which used to be easy. In any case, I’m not sure I ever really understood the basic concepts of an arcane tax system anyway. Help, I’m scared!

— Barbara

Dear Barbara,

No, your tax bill will not go up by $3,000 as a result of no longer having a $3,000 capital loss carryover deduction.

You don’t need to be scared; all you need to do is understand the difference between a tax deduction and a tax credit. The loss of a tax deduction means that your taxable income will now be $3,000 higher, and the amount of additional tax that you will owe depends on what your marginal tax rate is now without the deduction.

With this information, I hope you will feel more confident when preparing your tax return. However, you are not alone in your frustration with the tax system — it is complicated. Having said that, there are many places where you can get assistance with your return.

The IRS has a Volunteer Income Tax Assistance, or VITA, program to help low-income people, the elderly and persons with disabilities. The sites are located at schools, libraries and other convenient sites. You can call 1 (800) 906-9887 to find the location nearest you.

Thanks for the great question and all the best to you.

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