So made some bad decisions in 2024 and lost 80k in trading.
However, I recently made an investment and made 100k, but I am hearing some conflicting points about this.
I initially thought I will be able to move my 80k loss to 2025 tax year from 2024 and offset it when I do my tax return, but is this not true? Or is it? Will I have to pay tax on the 100k gain or just the 20k gain?
All help will be great, thanks!
Sounds like 80k loss on the 2024 return, then 100k gain on the 2025 return.
Losing 80k in the 2024 market WOW.
Murphy said:
Sounds like 80k loss on the 2024 return, then 100k gain on the 2025 return.
Losing 80k in the 2024 market WOW.
Heh, it’s way better than the opposite problem; 80k gain in 2024 and a 77k loss in 2025!
If you have a net loss for 2024 (for ALL capital transactions), you will deduct $3,000 of that loss against your ordinary income for 2024 and carry over the remainder to 2025, where it will be used to offset your net overall gain if applicable at the end of 2025.
@Zane
THIS. An expensive Commiefornia CPA saved my ass before with this because I did not know about it.
In principle, yes, assuming both transactions were in taxable accounts. Your Schedule D for 2024 will have an approx 77k capital loss carryover (3k will offset ordinary income in 2024) that can be absorbed by capital gains in 2025 (or later).
You invest in stocks. They go up. Yeah!! So you sell some, the profit is a capital gain.
Some go down. Boo - sell them. The loss is a capital loss.
Some of them you owned for more than a year. Those are long-term.
Some, you held less. Those are short-term.
Add the long-term ones together. That’s your net long-term gain or loss.
Add the short-term ones together. That’s your short-term gain or loss.
A. If both of those are gains, you owe tax on all the net gains. Your software will calculate the tax. But net short-term gains are taxed as ordinary income, just like your W2.
Net long-term gains can get special lower rates. Your software will do that math.
B1. If one was gain and the other is loss, you add them together. Net gain? Pay tax. The rate depends on whether the net total is short-term or long-term.
B2. Net loss? Then you get to use up to $3,000 on your taxes for this year. Just a deduction. Reduce your taxable income. Any excess carries to next year, to be entered into these calculations next year.
C. If both are losses, again, you get to use $3,000 of them this year, and the excess, if any, goes to next year. You use the short-term losses first, then long-term losses. Again, your software will do this.
@Bran
So just want to confirm, will this mean my taxable amount on just stock gains would be 23k?
Shea said:
@Bran
So just want to confirm, will this mean my taxable amount on just stock gains would be 23k?
You would use up to $3,000 on your return for 2024, depending on other things on the return, and, yes, the rest carries over to 2025, to offset most of those gains.
Sorry about your loss and congrats on the gains. It happens to lots of us. Make sure to take a lesson on risky investments in the future. I’ve had to learn the exact same lesson, more than once. I’d like to say I never will again…but you know.
Your 80k loss will carry into 2025 since passive losses are limited.
Zola said:
Your 80k loss will carry into 2025 since passive losses are limited.
So does this mean I only pay tax on 20k?
Zola said:
Your 80k loss will carry into 2025 since passive losses are limited.
So does this mean I only pay tax on 20k?
Depends, did you have any gains in 2024? If you just had an 80k loss then $1,500 would have been taken in 2024 and $78,500 flows to 2025. If married filing jointly then you take $3,000 in 2024 and 77k will flow to 2025.
Ya.
No…but yes. You have an $80k realized loss in 2024 (I’m assuming this is net of any gains), which means you can deduct $3,000 of that loss against your 2024 income and the remaining $77k will carry forward. You will deduct the $77k first against any gains in 2025, and then if there is still a net loss you will continue to deduct $3,000 per year until the carried-forward loss is all used up.
In your scenario, if you truly end up with $100k of net gains at the end of 2025 (remember it’s only January), you would deduct the full $77k carried-forward loss from 2024 from these gains and end up with $23k of net capital gains.
2024 is 3k loss. 2025 is 17k gain.
No, different tax years. But on the bright side you now have 80k in losses to carryover for 2025.
Where do I go if I wanna start trading?
If $80k is your total 2024 investing loss, you can only deduct $3,000, the remaining $77k is carried forward to 2025. If your $100k is your only 2025 gain, then you will have net income of $23k.
Hartley said:
If $80k is your total 2024 investing loss, you can only deduct $3,000, the remaining $77k is carried forward to 2025. If your $100k is your only 2025 gain, then you will have net income of $23k.
Thank you, people were saying I can only carry over 3k also for stock gains and losses. I didn’t think that was true.