So what is a? When it comes to short term capital losses and long term capital losses we need to make the distinction between the two. The determining factor is all about time. It depends on how long you hold the property before you sell it.
A short term capital loss is property held for one year or less. A loss is property sold for less than what is was purchased for. Now don’t get too excited because it can only be deducted as a loss on investment property, not on property for personal use.
Long Term Capital Loss
So, if short term is one year or less then, long term capital loss is one year or more. Actually it’s one year and a day because the first day is not counted. All capital gains must be reported to the IRS. If your capital loss is greater than the annual limit then you can carry over the difference the next year.
Don’t forget you may be able to use your stock market losses to reduce your tax burden. Did you know you can deduct up to $3,000 annually? If you’re married filing separately the amount is $1,500. You enter this information on line 13 of Form 1040.
If you should happen to have a net gain, the short term and long term are two whole different categories when it comes to tax rates. The rates vary but, the short term is generally higher rates than the long term capital gains. Usually the rates for capital gains are lower than the rates for regular income. It is the net capital loss that is directly deductible from your income and it doesn’t matter whether it’s from a short term loss or long term loss.
Of course you can visit websites to read all about the tax laws and recent changes. I don’t know about you but, I chose not to spend my time trying to keep up with all the changes. Why don’t you go to TurboTax Online and let their amazing software run the numbers for you? They have tax experts standing by to help you with any questions you might have. Audit Alert is a feature that warns you if something doesn’t look just right. Spend your time doing what you want to do and let the professionals at Turbo Tax handle the tax issues!
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