How to claim tax deduction for Mullen stock losses

But if they're grad students with minimal income, would they even benefit from the tax loss? Also, is there any wash sale rule to worry about if they wanted to buy back in later?

Even with minimal income, the tax loss can still be beneficial. The deduction reduces their taxable income dollar-for-dollar up to $3,000 per year. If they're earning stipends as GAs, those are typically taxable, so the deduction would directly reduce that taxable amount. Regarding the wash sale rule, that's a good point. If they sell at a loss and buy substantially identical securities within 30 days before or after the sale, they can't claim the loss for tax purposes. So if they're considering buying Mullen stock again, they should wait at least 31 days after selling to avoid wash sale rules disallowing the loss.

How does it work with crypto losses? I've got some underwater positions I want to claim but not sure if the same rules apply.

Is it really worth using a service? Can't you just report the losses when you file with TurboTax or whatever? The brokerage sends you the forms anyway.

For crypto losses, the platform handles those too. The IRS treats cryptocurrency as property, so losses are generally calculated the same way as stock losses. Their system automatically identifies which specific tax rules apply to your crypto transactions, which was helpful because the wash sale rules are currently applied differently. The regular tax software doesn't always optimize how you claim losses. My situation had some complications with multiple trades and tax-loss harvesting opportunities that my regular tax software missed. What I liked was getting strategic advice about WHEN to sell rather than just how to report after the fact. The brokerage forms show what happened, but not necessarily what you SHOULD do.

How does this actually work? Seems sketchy that they can somehow get you to the front of the line when everyone else waits for hours.

Yeah right. Nothing gets you through to the IRS faster. They're probably just recording your call info and selling it. No way this actually works.

It's actually pretty straightforward - they use a system that continually redials the IRS and navigates the phone tree until they get a spot in line. Then they call you and connect you to the agent. It's not cutting in line - they're just doing the waiting for you. They don't record anything - they're just connecting calls. When I used it, I talked directly with an IRS agent who cleared up my questions about how to document my capital losses from multiple brokerages. The agent never even knew I used a service to get connected.

That's really helpful advice! We do claim education credits each year. Would taking the capital loss deduction potentially mess with those benefits? What should I watch out for?

Generally, lowering your AGI with capital losses is actually beneficial for most education credits since many have income phaseout limits. The American Opportunity Credit starts phasing out at $80,000 for single filers and $160,000 for joint filers, while the Lifetime Learning Credit begins phasing out at $80,000 for single and $160,000 for joint filers. Capital losses that reduce your AGI could potentially help you stay under these thresholds if you're close to them. However, if your income is already low, you should ensure you have enough tax liability for non-refundable credits to be applied against. The AOTC is partially refundable, but the LLC is not refundable at all.

Question - does it matter which lots you sell if you bought the same stock multiple times? Do you have to sell everything or can you pick which purchases to sell?