Author Topic: Tax Loss Harvesting Against W-2 Income  (Read 816 times)

2Birds1Stone

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Tax Loss Harvesting Against W-2 Income
« on: December 21, 2018, 06:49:00 AM »
For all intensive purposes I understand that I can sell stock in my taxable account at a loss, and harvest that against any capital gains or investment income.

However, can I count that loss against earned income from my day job?

Right now I'm sitting on some big losses from VTI/VXUS purchases over the past year.

maizeman

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Re: Tax Loss Harvesting Against W-2 Income
« Reply #1 on: December 21, 2018, 07:05:39 AM »
You can deduct up to $3,000 of excess capital losses against ordinary income each year.

But the capital losses get used to offset capital gains first, and only if you have capital losses in excess of any capital gains are you able to move on to using them to offset regular income.

https://www.irs.gov/newsroom/capital-gains-and-losses-10-helpful-facts-to-know-0

2Birds1Stone

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Re: Tax Loss Harvesting Against W-2 Income
« Reply #2 on: December 21, 2018, 07:28:32 AM »
Thanks!

If my capital gains are unrealized, it wouldn't matter right? (I could then deduct against the $3,000 of w-2 income)

maizeman

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Re: Tax Loss Harvesting Against W-2 Income
« Reply #3 on: December 21, 2018, 07:35:02 AM »
Thanks!

If my capital gains are unrealized, it wouldn't matter right? (I could then deduct against the $3,000 of w-2 income)

Yes, as far as I know unrealized capital gains shouldn't impact anything on your tax return.

If you have capital losses left over after using $3,000 to offset ordinary income you'll also be able to carry those forward to future years and go through the same process again (either offsetting those capital gains if you sell and realize them, or offsetting another $3,000 of ordinary income if you don't).

appleshampooid

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Re: Tax Loss Harvesting Against W-2 Income
« Reply #4 on: December 21, 2018, 12:20:54 PM »
*intents and purposes

(sorry, pet peeve of mine)

2Birds1Stone

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Re: Tax Loss Harvesting Against W-2 Income
« Reply #5 on: December 21, 2018, 08:08:18 PM »
*intents and purposes

(sorry, pet peeve of mine)

Great catch! As an ESL grammar Nazi (what a horrific term), I appreciate the correction =)