How will these big hits I've taken in the stock market affect my taxes?
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731 points
thinker70 answered 9 months ago …
You do not state your country of residence but in most countries you can write off losses against future capital increases, in other words if you lost say $10,000. then the next year you earned $15,000. in capital gains then you could apply the loss and pay tax on only $5000. In some countries there is also a provision to carry a loss backwards to recover taxes paid on capital gains in previous years.
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2222 points
readytoretire answered 9 months ago …
For the US, you have to sell the stock to recognize the loss. And the year that you sell is when you report it. So if you had the loss in your stocks last year, but didn't sell them, no loss deduction. Also, if they were in an IRA or a 401(k), then no deduction as the gain wasn't currently taxable.
Short term losses and some long term losses go against the income side of your return, so it reduces your income, which reduces your tax. Long term losses are limited in how much you can take per year. If you have capital gains, they can offset all of them. Otherwise, the limit is $3000 a year. The remainder is carried forward to next year and so on until you credit the whole loss out.
