How to Claim Investment Loss on an IRS Form
The Internal Revenue Service requires you to report your investment gains as part of your taxable income when you file your income tax return. However, you can offset these gains with investment losses. If your losses exceed your gains for a given year, you can write off the excess losses to decrease your taxable income, up to the annual limit. As of 2010, your net loss cannot exceed $3,000 ($1,500 if married and filing separately). Only investments that you have sold can be counted. You cannot claim a loss because the value of an investment you still own has gone down.
Other People Are Reading
Instructions
-
-
1
Complete part I of IRS Schedule D to document your short-term gains and losses. "Short-term" refers to investments you have held for one year or less.
-
2
Complete part II of IRS Schedule D to document your long-term gains and losses. "Long-term" refers to investments you have held for more than one year.
-
-
3
Add your short-term net return to your long-term net return. For example, if you lost $1,000 in short-term investments and $1,500 in long-term investments, your net return would be negative $2,500.
-
4
Determine the smaller of your total loss or the annual limit. In this example, if you are single, you would see that your loss, $2,500, is smaller than the loss limit, $3,000.
-
5
Report the smaller of your loss or the annual loss limit on line 13 of Form 1040. Use parentheses to denote a loss. Finishing the example, you would report your $2,500 loss on line 13 of Form 1040 as "(2,500)."
-
1
References
Resources
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
