Losses and Tax Deductions

While it is always prudent to be positive in all that we do I was just wondering about losses and tax deductions (American tax code).

Lets say one screws up and loses, say about 2 grand over the course of the year.

Can you deduct this investment loss against other sources of income or can you only deduct it against other investment gains?

You can count $3000 in Schedule D losses against your normal income. If your losses are greater than $3000, they can be carried forward.

For those of you who are active and profitable, it may be worth your time to look into “trader in securities” status as well. In the US, the IRS has allowed traders to elect a reporting status that permits Schedule C deductions of certain trading related expenses and may allow you to “mark to market” your positions at year end. Go to the IRS website and look under publications.

Tax Topics - Topic 429 Traders in Securities (Information for Form 1040 Filers)


I am not a tax professional; nor is this intended as personal advice to you, westside, or to anyone else. Remember to keep it simple. Concentrate on the trading at first and get the details ironed out as you progress. Hope this helps…

Very helpful with some great links.