Investors who received stock market losses in 2019 can use them to offset their capital gains, Lisa Greene-Lewis, CPA and tax expert at TurboTax, tells TheStreet’s Tracy Byrnes in this special video series in partnership with TurboTax. The losses can offset ordinary income.
Since the market was up in 2019, many investors generated healthy returns. They can also offset those gains and carry forward the losses to the following year, she says.
Investors can carry forward up to $3,000 of losses every year.
Some investors are already preparing for their 2020 tax return. Some investors have had some major losses already.
People who own stocks that suffered losses and do not believe the prices of those stocks will rise, but are instead expecting some huge gains on some other ones, should consider selling those losing stocks in 2020, Greene-Lewis says. By selling those losing stocks, this strategy offsets the gains when you sell your stocks that are performing well. This is called tax loss harvesting.
After an investor sells a stock, he or she needs to wait 31 days to be in compliance with the IRS wash sales rule. You cannot buy the same stock back within that time period, Greene-Lewis says. Otherwise, you cannot report that as a loss on a tax return.
Another strategy investors can deploy is called tax gain harvesting if they are expecting their capital gains rate to be a lower rate than the following year. In that case, they should sell their winning stocks in 2020, when you think that their capital gains rate will be lower.
There are now 3.5 million millennial investors right now. People who actively trade stocks need to keep track of their trades.
For the first time in 10 years TurboTax Premier was redesigned to address investors pain points of entering multiple transactions in their tax returns and figuring out gains and losses. TurboTax Premier can upload and transfer over 1500 stock transactions at once and accurately figures out gains and losses without taxpayers manually entering them. It also includes taxpayers being able to upload and transfer over 2,000 cryptocurrency transactions at once.
For more tax tips on deductions and credits, income and investments, refunds and information for folks who are self-employed, check out the TurboTax blog. If you still need to file your taxes, you can go online at TurboTax.com and easily file from the comfort of your home. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average 15 years-experience to get your questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your tax return.
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