What happens when you report a loss on your income tax?
Looks like I am going to take a hit this year with my portfolio, what happens when I report a loss on my income tax? I know the government won’t give me money, is it just a loss?
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I believe a loss offsets your income you make, but that is only if you sell your stocks (or whatever you have in your portfolio). If you hang on to it then I don’t think you can claim a loss. So if you sell, then you can and your taxes will be lower…not for certain, but my brother does it all the time so he doesn’t have to give the gov so much money.
This is marginally helpful: http://www.wwwebtax.com/deductions_z_other/capital_losses.htm
It basically says that you can deduct a certain amount of capital (investment) losses ($1,500 or $3,000) from your overall income, which will lower your tax burden somewhat.
As miasmom says, you have to “realize the loss”—actually sell the securities for less than you paid for them when they were bought. If you don’t sell anything, you haven’t experienced a capital gain or loss.
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