Whether the one stock you sold for the year was a loss or your whole portfolio tanked and you didn't have any gains, you can still claim a tax break for those losses. However, the losses are likely to have a smaller effect on your taxes than if you had capital gains to offset.
Generally, you can use your capital losses to offset your capital gains for the year plus a $3,000 deduction ($1,500 if married filing separately). However, if you have no gains, you can deduct losses up to only $3,000. If you're married filing separately, the limit drops to $1,500 per spouse. The remaining losses can be carried forward into future tax years.
If you have losses in excess of the deduction limits, you can carry those forward to offset future gains. However, you can't use them to offset ordinary income except to the extent of the $3,000 deduction allowed each year. For example, if you're single and have $15,000 in capital losses in the first year, you could deduct only $3,000 and would have to carry forward the remaining $12,000. In year two, if you have $5,000 of gains, you could use $5,000 to offset the gains plus another $3,000 for the deduction, but the remaining $4,000 would have to be carried forward again.
When you file your taxes, you have to report your individual capital gains and losses with Form 8949 and copy the totals over to Schedule D to figure your net gains and losses. The deduction for capital losses goes on line 13 of Form 1040. Put parentheses around your loss so it isn't accidentally interpreted as a gain. For example, if you're claiming a $3,000 loss, enter (3,000). If you have capital losses exceeding the deduction limit, keep a copy of your Schedule D to refer to in future years so you know how much you can carry forward.
To make the most of your losses, consider timing your sales of capital assets so that you take the losses in the years when you have capital gains to offset. For example, say you have two stocks you're planning on selling, one with a gain of $10,000 and the other with a loss of $10,000. If you sell the gainer in December of year one and the loser in January of year two, you'll have to pay taxes on the $10,000 gain in year one and then be able to deduct only part of the loss in years two, three, four and five unless you have future gains, making you wait four years to fully reap the tax benefits of the loss. However, if you sell them both in year one, the loss cancels out the gain, letting you take full advantage of the loss immediately. Obviously, this shouldn't dictate your investment strategy but rather be a small tweak to maximize your tax benefit.
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