Can I write off my Roth IRA losses on my taxes?

So if I have multiple Roth IRAs with different brokerages, I'd have to close ALL of them? Even if only one has losses? That seems extreme. And what about the 2% AGI limitation - does that mean if my AGI is $75,000, I'd need more than $1,500 in losses before I could claim anything?

Yes, you would need to close ALL Roth IRAs completely to potentially claim any loss. Closing just one account or selling just one position doesn't work for tax purposes, even if that specific investment lost money. Regarding the 2% AGI threshold, you're exactly right. If your AGI is $75,000, you'd need more than $1,500 in miscellaneous itemized deductions before you could start claiming anything. But there's another issue - the Tax Cuts and Jobs Act suspended miscellaneous itemized deductions subject to the 2% floor through 2025. So currently, even if you did liquidate everything at a loss, you couldn't claim that deduction on your federal return.

Wait, so even if I sell everything at a loss inside the Roth, I can't deduct it? That seems really unfair. What if I close the entire Roth account? Would that make a difference for claiming the loss?

Selling investments at a loss inside the Roth doesn't create a deductible loss - that's correct. If you close the entire Roth IRA and withdraw everything, you may have a deductible loss only if the total withdrawal amount is less than your total contributions. However, even if you qualify for this, the loss would be considered a miscellaneous itemized deduction subject to the 2% of AGI threshold, which was suspended by the Tax Cuts and Jobs Act through 2025. In practical terms, most people won't be able to claim this deduction under current tax laws.

How does this actually work? Do they connect to your brokerage account or do you have to upload statements? I've got some losers in my retirement accounts too but I'm never sure what the best move is.

Sounds interesting but kinda skeptical. Did they suggest any alternatives to claiming the loss? I mean if you can't write it off what's the point?

The system works by analyzing docs you upload - I just took screenshots of my account statements and uploaded them. You don't need to connect your actual brokerage account which I liked for security reasons. They actually showed me that tax-loss harvesting in my taxable accounts was much more valuable than trying to recognize the Roth losses. They also suggested rebalancing within the Roth rather than taking distributions, which helps preserve the tax advantages long-term. Their recommendation saved me more in taxes than I would have gotten from trying to claim the Roth losses.

How does taxr.ai work exactly? I've got a similar situation with my retirement accounts but I'm worried about giving my financial info to some random website. Did you have to upload statements or anything?

I'm skeptical about these tax services. Did they just tell you the same thing as the comment above? That you basically can't deduct Roth losses in most cases? Seems like common knowledge you could get from Google.

The site works by analyzing your specific tax situation - you can upload documents if you want more detailed analysis, but I just entered my contribution history and current value manually. It's secure and they don't store your actual financial docs permanently. They actually went beyond just telling me I couldn't deduct the losses. They showed me how my particular mix of investments could be repositioned for better tax efficiency across all my accounts. They suggested moving certain investments to my taxable account where losses would be deductible, while keeping others in the Roth.

How exactly does this work? Do they just call the IRS for you? Seems like something I could do myself...

Yeah right, nobody gets through to the IRS in 20 minutes. I've literally waited 2+ hours multiple times this year and sometimes they just disconnect you. This sounds like BS to me.

They don't just call for you - they use a system that navigates the IRS phone tree and waits on hold in your place. When they reach a live agent, you get a call to connect with them. Saves you from listening to that awful hold music for hours. I was skeptical too until I tried it. The system holds your place in line while you do other things. I tried calling myself three times before and never got through - once waited 1.5 hours before getting disconnected. With Claimyr I was doing laundry when I got the call that an agent was on the line. Totally different experience.

Wait, there's a service that gets you through to the IRS? How much does that cost? I've been trying to reach someone about my tax situation for weeks with no luck.

This sounds made up. If it was so easy to get through to the IRS, everyone would use it. I've literally never been able to reach a human there no matter what number or what time I call. I'm very doubtful this actually works.

The service doesn't have a fixed cost - you can check their site for current pricing. It's basically a convenience fee for not having to waste hours on hold. For me, it was totally worth it considering I'd already wasted days trying to get through. It absolutely works - that's the whole point of the service. They use technology to navigate the IRS phone systems and wait on hold in your place. Once they reach a human agent, they call you and connect you directly. I was skeptical too until I tried it. They got me through to a real IRS agent in about 47 minutes, while I was just going about my day.

I get what you're saying but these particular investments have fundamentally changed (one company had a major scandal and another is facing bankruptcy). I don't think they're coming back. Would it make sense to at least sell these losers and buy something different within the Roth?

Absolutely - selling poor performers and reinvesting within your Roth is a completely different strategy than trying to close the account for a tax write-off. You can sell and reinvest inside the Roth with no tax consequences at all. This lets you move from those troubled companies to better investments while keeping all the tax advantages of your Roth IRA. This is actually one of the benefits of retirement accounts - you can rebalance and adjust your investments without triggering tax events. So if you've lost confidence in those specific investments, repositioning within the Roth is definitely the way to go.

TurboTax will generally prevent you from directly claiming losses inside a Roth IRA since those aren't deductible. If you did completely close your Roth account at a total loss (withdrawing less than your contributions), TurboTax might allow you to enter it as a miscellaneous itemized deduction, but would likely warn you that it's not deductible under current tax law.

Would it ever make sense to just withdraw the contributions? I know you can take out what you put in without penalty, right? Then maybe invest that somewhere else where losses could be deducted if they happen?

You could withdraw contributions without taxes or penalties, that's correct. But I wouldn't recommend it just because you had some losses. Taking money out of a Roth means losing all the future tax-free growth potential on those funds. That's usually more valuable long-term than any potential tax deduction from losses in a taxable account. Plus, Roth contribution limits are relatively low each year, so once you take money out, you can't just put large amounts back in beyond the annual limits (currently $6,500 or $7,500 if over 50). Most financial advisors would suggest keeping the long-term tax advantages rather than focusing on short-term losses.

Tax-gain harvesting doesn't really apply to Roth IRAs because as you mentioned, the gains aren't taxed anyway. There's no tax benefit to selling winners. The only potential benefit would be if you think a position is overvalued and want to lock in gains before a potential drop. But that's just investment timing, not a tax strategy. Inside a Roth, all transactions are tax-free whether they're gains or losses.

This is really solid advice. I've been in a similar situation with my Roth and the hardest part was accepting that the losses couldn't be written off anywhere. But you're absolutely right about the long-term perspective - I ended up rebalancing into broad market index funds instead of individual stocks, and it's been much less stressful. The tax-free growth potential is still there even after taking losses on specific investments. Sometimes the best move is just to learn from the mistake and pivot to a more diversified strategy within the same account.

This is great advice about diversifying within the Roth instead of abandoning it completely. I'm curious though - when you sell those losing positions and buy index funds, does that reset your cost basis within the Roth? Or does the Roth just track your total contributions regardless of what happens with individual investments inside it? I'm trying to understand if there's any record-keeping benefit to making these moves now versus later.

Great question! Within a Roth IRA, there's no cost basis tracking for individual investments like there would be in a taxable account. The Roth only tracks your total contributions (your "basis") versus earnings over time. So when you sell losing positions and buy index funds, it doesn't reset anything from a tax perspective - it's all just internal rebalancing. The main record-keeping benefit of making moves now is psychological and strategic: you're cutting losses on investments you no longer believe in and repositioning for potentially better future performance. Since all transactions within the Roth are tax-neutral, the timing doesn't matter from a tax standpoint - only from an investment performance perspective. The Roth will continue tracking your total contributions versus total account value regardless of how many times you buy and sell internally.