how can capital losses carryover used be more than $3000? (in US income taxes)

Question

This is regarding short-term capital gains (actually losses) carried over from past years. I have a capital loss carryover of about $4800 from 2019. I had a gain of about $12k in 2020. I thought the capital loss was limited to $3000 each year. That's why I had $4800 carryover from last year. I have imported my documents into TurboTax from Interactive Brokers (IB), so I assume they're correct.
The problem is that it looks like TurboTax is using all of the $4800 capital loss carryover from last year, instead of being capped at $3000, and carrying over the leftover $1800 to next year.
I have done this import from IB twice now. I deleted it the first time, as I was trying to understand how much my taxes owed changed due to the capital gains. I don't have any evidence, but I thought the first time, the carryover was capped at $3000 as expected, with 1800 carrying over to next year. But now it's all being used this year.
Is there any situation where this happens? Where the capital loss carryover used is > $3000?
I am filing married jointly. I'm in the >80k bracket. Using Itemized deduction, in case that matters. Thanks.

Bob Baerker · Accepted Answer

If your capital losses exceed your capital gains, you can deduct up to $3k from your income and  the remainder above the  $3k loss is carried forward.
If in  the following year your gain exceeds the carryover loss, you would use all of the carryover loss as an offset.  You would not be limited to only $3k.
In your example, you would have a capital gain of $7,200 in 2020 and that is why TurboTax is using all of the $4,800 capital loss carryover from last year.

how can capital losses carryover used be more than $3000? (in US income taxes)

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