Lets say I lost $1000 on a short term stock trade, what happens when I do my taxes?

Question

I know I would owe 100dollars of tax but what else happens?

Answer 1

Why would you owe $100 if you have a loss of $1,000?

If you have short term gain, then you will reduce the gain by your short term loss (that is by $1,000).

If you did not have any short term capital gain, then you will reduce your ordinary income by the loss (the maximum allowed capital loss deduction that is more than capital gains is $3,000).

If you have short term loss of more than $3,000, you will deduct loss of $3,000 in the current year and carryforward the balance loss in the next year.

Answer 2

No, if you had a loss, not a gain, you won't pay tax on it.

You'll show the detail of the loss on a schedule D with you'll include with your 1040 (you can't use a 1040EZ or 1040A). If you have other income, the $1000 will subtract from your other income on the 1040 so you'll owe less tax.

Answer 3

Who told you you'd owe $100 in tax on a loss?? Please stop listening to that person!

If you have a stock loss, first you must use it to offset any stock gains. If you use up the loss against gains then that's it, but it will reduce the tax on the gains.

If you have left over loss after offsetting any gains you may use the remaining loss to offest other income and reduce the tax on that other income. You're limited to using $3,000 worth of losses each year. If you have more than $3,000 in losses in any year you can carry the excess forward to the next year and use it to offset stock gains and then other income in the future. You continue carrying any balance forward until it's used up.

Answer 4

When you incur a loss of $ 1,000 trading stock, you could use the loss to offset your previous or future capital gains.

You do not owe any tax when you have a loss. It is when you have earned income (i.e. a profit trading stock) on which you pay tax.

Sorry to hear that you lost some money.

Answer 5

What happens is that you fill out Schedule D which shows a $1,000 loss. The loss is then transferred to Form 1040 and is subtracted from your other income.

A capital loss of $1,000 will reduce your income by $1,000. so you will pay less taxes, not more.

Answer 6

Report gains and losses on Schedule D - Capital Gains and Losses. You may deduct up to $3000/yr of net capital losses - the remainder (NCL)is carried forward.

You don't owe any tax. The loss offsets other income and you reduce your income tax.

Good luck, LD

Answer 7

Last time I checked, you only had to pay tax on capital gains. Never heard of paying taxes on a loss.

Answer 8

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Answer 9

you can (and should) write off stock losses. I believe it's up to $3000/year.