Are There Tax Benefits in Stock Market Losses?
Q: My investment portfolio has declined significantly in the last 18 months. Are there any tax benefits owed to me? When you sell investments, such as stocks, bonds or mutual funds at a gain, you generally pay taxes on the capital gains. When you sell at a loss you can force the IRS to give you a tax break. Short-term capital gains are gains on investments held for one year or less and are taxed at your income tax rate. Long-term capital gains are gains on investments held for more than one year and are either not taxed, if you are below the 15% income tax bracket, or are taxed at a 15% rate. An unlimited amount of short-term gains can be offset with short-term losses. An unlimited amount of long-term gains can be offset with long-term losses. Additionally, you can force the IRS to provide you a net $3,000 annual loss against your income. If you are in the top tax bracket of 35%, you can avoid paying $1,050 in income taxes. So, what happens if you end up with a $36,000 net loss, for ex
