Author Topic: Tax Loss Harvesting Question  (Read 1430 times)

ZiziPB

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Tax Loss Harvesting Question
« on: February 05, 2015, 03:00:14 PM »
I got my Fidelity 1099 and it turns out that my taxable account managed to produce just a touch over $3K of dividends (the vast majority of which are qualified dividends).  I think I have about $1600 loss carryover from last year and another $1700 or so realized loss this year.  I admit to being a total tax noob, so bear with me.  As I understand it, I can take up $3k deduction against ordinary income from my realized losses.  But looking at my tax situation, it seems that my loss will be applied against the dividends first and then whatever is left I can deduct against my ordinary income (up to $3K)?  So in my situation, it would have been beneficial to have $6K of realized losses for 2014?  Ugh, if that is the case, I wish I understood this sooner as I obviously cannot do anything now.  Not that I had a lot of losers last year, it was just the international allocation that was a candidate for harvesting.  But I was aiming for $3K where I really should have played it better!

MDM

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Re: Tax Loss Harvesting Question
« Reply #1 on: February 05, 2015, 04:20:47 PM »
I got my Fidelity 1099 and it turns out that my taxable account managed to produce just a touch over $3K of dividends (the vast But looking at my tax situation, it seems that my loss will be applied against the dividends [capital gains] first and then whatever is left I can deduct against my ordinary income (up to $3K)?
Close, but not exactly.  See edits in quote.  See http://www.irs.gov/taxtopics/tc409.html.  It can be confusing because there is a "Qualified Dividends and Capital Gains Worksheet," but capital losses are applied against capital gains first, etc. as above.

DirtCheapDirtyDeedDoer

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Re: Tax Loss Harvesting Question
« Reply #2 on: February 05, 2015, 05:17:13 PM »
If you have more than $3K in excess losses you can always carry it forward to later years.

johnny847

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Re: Tax Loss Harvesting Question
« Reply #3 on: February 05, 2015, 05:26:14 PM »
Read through the irs documentation again and you will find that capital losses do not cancel dividend income.

ZiziPB

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Re: Tax Loss Harvesting Question
« Reply #4 on: February 06, 2015, 07:43:08 AM »
Thanks all.  Clearly, I need to educate myself in tax matters.  It will be one of my goals for 2015 ;-)