I have about $10k realized gains from crypto this year, but I also hold some stocks that are down. Should I sell some of those stocks at a loss to offset the crypto gains? Or just keep holding and pay taxes on the 10k?
Is it better to sell some stocks at a loss to offset gains before next year?
byu/DryGeneral990 intax
Posted by DryGeneral990
3 Comments
Not a tax professional but I would just pay the taxes and enjoy what’s left over. Anytime you make money you’ll pay taxes. Offsetting with a loss just minimizes the gain, but the gain is why you invest in stocks. If you’re going to sell the stocks you should sell for other reasons besides offsetting gains.
Sell the losers for sure!
Are your crypto gains long-term or short term? (If you held the crypto for more than one year before selling it, it’s long-term.)
If long-term, check the long-term capital gains brackets to see if you’re actually going to owe tax on any of it, since the first LTCG bracket is taxes at 0%.
If you would pay actual tax on your gains (either because some or all of your income is above the 0% bracket, or because some or all of your gains are short-term), then you can certainly consider harvesting losses. Whether it makes sense to do so is a complicated question. Do you think the stocks will turn around? Do you need the money sooner rather than later? What rate will your gains be taxed at, and would you rather “save” your losses for a later year (if you think they’ll stay down)?
It’s not a super simple thing to answer, unfortunately (unless your gains would all be taxed at 0% & you don’t need the money from your losses right now, in which case no reason to harvest those losses now).