can you deduct losses from investments on your income tax when 401k or ira money was used?

Answer 1

No, they aren't deductible. And contrary to what the other person said, you can't deduct losses when you take the money out - you pay tax then on the entire amount withdrawn from a 401K or traditional IRA, assuming it was funded with pre-tax money. On a ROTH IRA, you wouldn't pay tax on the withdrawal, but can't deduct any investment losses there either.

Not being able to deduct investment losses is the price you pay for being able to have the account grow tax-deferred for the time the money is in the account.

Answer 2

In addition to what others have mentioned, the only losses you can take are (according to pub 590) are on withdrawals of the money you put in for the current year (in this case for 2006), or the net loss on a complete distribution of all the IRA assets.

Losses that stay within the IRA are never deductible. For example, if you IRA was worth $20000 on 12/31/2005, but due to investment losses was down to $15000 on 12/31/2006, you could not claim that.

Answer 3

Moe,

You can never deduct losses in these accounts. You deducted the full amount of the contribution in the year you made it, to deduct losses is a double deduction - this won't work. Respectfully, I suggest that you ignore the other answers except to your own peril.

Answer 4

NOPE. 'you do no longer pay tax on the helpful factors, it grows taxfree and losses additionally are taxneutral. Your agency suits YOUR contributions, no longer the growth. no longer likely that your portfolio fee will pass to 0, yet they're painfully shrinking. At this element, we are able to in basic terms forget approximately approximately it and wait and pray for restoration of the marketplace and our financial equipment. replace your allocation far off from agency inventory for now.

Answer 5

Losses on Qualified plans ,IRS's Annunities, can only be claimed to the extent that they exceed your cost/basis in the account.

Ex: Account balance 10,000.00
Cost basis 5,000.00

A loss on the account of 10,000.00 would have to exceed 5,000.00 before any of the loss is claimable.
So if the above mentioned account lost 6,000.00 you would have a loss of 1,000.00 claimable on line 22 of the Schedule A to the extent that you are otherwise eligible to file Schedule A.

Publication 590
http://www.irs.gov/publications/p590/index.html
http://www.irs.gov/publications/p590/ch01.html#d0e6398

Answer 6

Only if you are withdrawing $$$ from the accounts and the equities were sold in 06 .
But not if it was a Roth IRA.

I think , but as always , ask the IRS . . .

http://www.irs.gov/