Lost money in Stock Market?

Question

I lost quite a few money in the Stock Market this year. How will this loss affect my income tax in the coming year?

I lost $8464 this year.

Answer 1

Unless you sold the stock that had the loss, it won't affect your tax return.

If you sold stock, you'll show all of the sales on a schedule D. You'll net the losses and gains, and if you have a net loss, can take up to $3000 of it against other income for the year. Any amounts over $3000 can be carried over to future years, and $3000 per year taken against other income that year.

Answer 2

Take that 100 bucks from the next sum you want to invest and go and buy the Rich Dad, Poor Dad books by Robert Kyosaki. Buying Pfizer probably won't lose you money in the long run but have you looked in to what it'll cost you to take the money out. On sums that you are dealing with it could be about 30% of your profit. We all need to diversify. Have sums available that are liquid and some that you can lock away. You are to be congratualted on starting a longterm savings plan so young but be sure that you are happy to reinvest the dividends otherwise you will erode your main source of capital growth. By the way, there are no risky investments, there are just risky investors and it sounds like you are a very risky investor by buying stocks that you have no idea about. That is why I'd invest first in education so that when you make a load of money (as I hope you do) you have a prayer of holding on to it. You need education, a plan to work and some really good advice. Go find the richest person you know and ask them for their advice. Then follow it no matter how boring it sounds. And to answer your question about how you could lose money on Pfizer in the long run the answe is that you could argue that you probably won't but what if you HAD to sell soon, then you may lose money. Also it's not about absolute returns i.e. what you sell for minus what you paid. You need to calculate what that money could have done for you in another investment or even paying down debt. Inflation will also erode the value of your money by about 2-3% per year so you need to account for that in your calculations too. Complicated isn't it? Good luck anyway you are eons ahead of most of your peers.

Answer 3

Minor note--since this always leads to confusion.

Let's say you have a $10,000 loss this year and no other gains. You'd get to take a $3,000 loss against other income and carryforward the $7,000.

If you had no future gains, you would use the loss at $3000 a year until you could use it up.

On the other hand, if you had a gain of $5000 in 2008, you would use up the entire loss in 2008. $5000 for the gain and $2000 against other income.

Or, the other extreme, if you had no other income in 2008, when you do the capital loss carryforward to 2009, you would still have a loss of $7000 since you didn't use any of it.

Answer 4

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Good Bye

Answer 5

I assume you're an American, correct?

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Net capital losses are deductible against your income up to a limit of $3k per year. Any excess carries forward to future years. There is no limit on the number of years you can carry them forward.

[net = capital losses minus capital gains]

Answer 6

Well, you can offset your loses to your income.