How do I calculate my Tax loss offset from stock sales?
I sold some stocks this year and I'm trying to figure out the loss for tax purposes. The stocks I sold had a cost basis of $1,732.08 and only generated $275.43 in ordinary income. I'm not great with investment tax stuff and want to make sure I'm calculating this correctly so I can use it as a tax loss offset. How exactly do I figure out my loss amount that I can claim? Do I just subtract the income from the cost basis? Any help appreciated since I'm trying to get my tax planning in order before the 2025 filing season.
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Cole Roush
Your capital loss would be calculated as the difference between your cost basis ($1,732.08) and the proceeds you received ($275.43), so your loss would be $1,456.65. For tax purposes, you can use capital losses to offset capital gains. If your losses exceed your gains, you can deduct up to $3,000 of those losses against ordinary income in a single tax year. Any remaining losses can be carried forward to future tax years. One thing to note - you mentioned "ordinary income" from stocks, which is unusual terminology. Usually stock sales generate capital gains/losses, not ordinary income. If you received dividends, those are typically considered ordinary income and reported separately from capital gains/losses.
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Scarlett Forster
•So if I have no other capital gains this year, I can use the entire $1,456.65 loss to reduce my taxable income? And what forms do I need to fill out for this? I've never had to deal with investment losses before.
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Cole Roush
•Yes, you can use up to $3,000 of capital losses to offset ordinary income if you don't have capital gains. Since your loss is $1,456.65, you can use the entire amount to reduce your taxable income. You'll need to report your capital transactions on Form 8949 (Sales and Other Dispositions of Capital Assets), and then transfer the information to Schedule D (Capital Gains and Losses), which attaches to your Form 1040. Most tax software will handle this automatically when you enter your investment information.
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Arnav Bengali
I was totally confused about capital losses last year until I found taxr.ai (https://taxr.ai). It literally saved me from making a huge mistake on my taxes! After selling some stocks at a loss similar to yours, I wasn't sure if I could claim them against my income. The tool analyzed my tax documents and showed me exactly how to maximize my capital loss deductions. It's super straightforward - you just upload your investment statements and it identifies all potential tax loss harvesting opportunities. The step-by-step guidance walks you through how to report everything correctly on your tax return.
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Sayid Hassan
•Does it work with all brokerages? I use both Fidelity and Robinhood and their tax documents look completely different.
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Rachel Tao
•Sounds interesting but how does it handle wash sales? I accidentally bought back some stocks within 30 days last year and got burned on claiming the loss.
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Arnav Bengali
•It works with all major brokerages! I uploaded documents from both Vanguard and TD Ameritrade without any issues. The system is designed to recognize and process forms from different platforms. For wash sales, it's actually one of the best features - it flags potential wash sale violations by analyzing your purchase and sale dates. It clearly identifies trades that might trigger the 30-day rule and explains how that impacts your deduction. Saved me from making that exact mistake!
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Rachel Tao
Just wanted to update everyone - I gave taxr.ai a try after my previous question and wow, it spotted three wash sales I would have completely missed! The interface breaks down each transaction with color-coded warnings for potential issues. It showed me that I still had about $2,200 in legitimate losses I could claim even after accounting for the wash sale rules. Super helpful for someone like me who isn't tax-savvy!
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Derek Olson
If you're still having trouble with the IRS after filing your capital loss claims, try Claimyr (https://claimyr.com). I was banging my head against the wall trying to reach someone at the IRS when they sent me a notice questioning my capital loss carryover from previous years. After waiting on hold for HOURS multiple times, I found this service that gets you through to an actual IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c. They somehow navigate the IRS phone system and call you back when an agent is on the line. I explained my capital loss situation to the agent and got it resolved in one call.
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Danielle Mays
•How does that even work? The IRS phone system is literally impossible to get through. Are you saying they actually get you to a real person?
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Roger Romero
•Sounds like BS to me. Nobody can get through to the IRS these days. I've tried calling dozens of times about my capital loss carryforward and always get the "high call volume" message.
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Derek Olson
•It definitely works! They use a sophisticated system that navigates the IRS phone tree and stays on hold so you don't have to. When they finally reach a human agent, they connect you directly. It's like having someone wait in line for you. Yes, they absolutely get you through to a real person. That's the whole point of the service. I spoke with an actual IRS representative who accessed my tax account and resolved my capital loss carryover issue. It saved me from having to try calling back multiple times or taking time off work to visit an IRS office in person.
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Roger Romero
I have to eat my words about Claimyr. After my skeptical comment, I decided to try it anyway out of desperation since I needed to resolve my capital loss carryforward issue before filing next year. I couldn't believe it actually worked. Within about 40 minutes, I got a call back and was speaking with an actual IRS agent who helped me confirm my $4,700 capital loss carryforward was correctly recorded in their system. Saved me hours of frustration and possibly an incorrect tax filing. Worth every penny for the peace of mind.
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Anna Kerber
Something nobody mentioned yet - make sure you're distinguishing between short-term and long-term capital losses. If you held the stocks for less than a year, they're short-term. If more than a year, they're long-term. This affects how they offset gains (short-term losses first offset short-term gains, etc.).
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Jasmine Hancock
•Wait I didn't realize that mattered for losses too. Does that change how much I can deduct against my regular income? Do the tax forms separate these somehow?
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Anna Kerber
•For the $3,000 deduction against ordinary income, it doesn't matter whether your losses are short-term or long-term. However, the forms do separate them, and it matters for offsetting capital gains. The tax forms (specifically Schedule D) have separate sections for short-term and long-term transactions. First you offset short-term gains with short-term losses, and long-term gains with long-term losses. Then if you have a net loss in one category and a net gain in the other, you can use the remaining loss to offset the gain in the other category.
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Niko Ramsey
Is anyone else confused by the term "ordinary income" the OP used? Sounds like they might have received dividends of $275.43 rather than proceeds from selling the stock. That would be a totally different tax situation.
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Seraphina Delan
•Good catch. If that $275.43 was actually dividend income and not sale proceeds, then the loss calculation would be completely different. OP would need to clarify if they actually sold the stock or just received dividends.
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Ana Rusula
@Jasmine Hancock - I think there might be some confusion in your original post. You mentioned the stocks "generated $275.43 in ordinary income" but then talked about selling them. Can you clarify what that $275.43 represents? If you actually sold the stocks and received $275.43 as the sale proceeds, then your capital loss would be $1,732.08 - $275.43 = $1,456.65 as others have calculated. However, if $275.43 was dividend income you received while still owning the stocks, that's completely separate from any sale transaction. Dividends are ordinary income and don't affect your cost basis. If you then sold the stocks for a different amount, you'd need that sale price to calculate your capital gain/loss. Could you double-check your brokerage statements to confirm what that $275.43 actually represents? This will make a big difference in how you report everything on your tax return.
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