Why isn't my capital loss carryover reducing my tax from short-term capital gains?

External question — Personal Finance Stack Exchange Author: user26270 Original post: https://money.stackexchange.com/questions/137887 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I am using Turbo Tax for these calculations. Before entering my investment info/capital gains, I had a federal refund of $272. After entering my capital gains and investment info, I owed $1900, for a change of around $2372 due to investments. My AGI (after itemized deductions) is in the 80k tax bracket, which is 22%. I am filing as married jointly. I did a fair amount of day trading options, so these are all short-term capital gains, which are just taxed at ordinary income levels, right? Numbers from 1099-B: Proceeds : 870,027 Cost (or basis) : 866,589 Wash sale loss disallowed : 8554 870,027 - 866,589 = 3438, plus 8554 wash sales = 11,992, which is what TurboTax is displaying as their summary for this income. But 22% of this is $2638. There is also a Section 1256, -$1200, which I thing is for options contracts held at the end of the year, unrealized gains. I had to look this up, still don't quite get it, but it sounded like these unrealized gains were somehow supposed to be counted. So if I take off this $1200, 11992 - 1200 = 10,792 x 22% = $2374, which is almost exactly the change I'm seeing in TurboTax. However, I had a capital loss carryover of $4800. I thought this was supposed to be a direct reduction from my capital gains, but it looks like it's not counting at all. Why isn't my capital loss carryover reducing my capital gains taxes?