Currently my trading account for the year has 1300 in realized losses. I am playing around with the idea of selling my position in Wolf which would increase my realized losses to 5600. Is this worth doing for a better tax return?
Posted by AK-Cato
5 Comments
In what world would this make sense? Genuine question because there could be practicality to it and I’m just ignorant.
To me, on the surface it says “Should I pay 5600 to save ~1100-1500 as a deduction on taxes”
3k annual limit of losses per year in USA. It will rollover to next year if there is more.
If you like the stock there is no point to sell tho
The only thing you can do with realized losses in a tax year is use them to offset realized gains. If you have 1300 in gains this year, the losses will bring them down to zero for tax purposes. If you have no realized gains, the losses are nothing but loss, and adding to them would only be more loss.
Depends. Do you have other capital gains you can use the loss to offset? Otherwise you can only use 3000 loss against ordinary income.
If you don’t have any money issues, it doesn’t matter. Eventually you will harvest losses, eventually you will pay capital gains. It’s just moving when. $3k can be deducted from your gross income for losses. So if you made $70k this year in income, you take that down to $67k you will pay tax on. You would have paid 22% on that $3k so you “save” $660 on your taxes this year. Thats assuming you took no capital gains this year. Now you took a gain of $3k from a SLV call you bought last week, this loss would cancel those gains and now it’s like you made nothing.
It’s all the same though eventually. People are just moving money. If you take the $3k wins this year, and wait to realize the $3k losses on next year it will once again even out.