Capital gains/losses tax question

Quote from Tom631:

I'm confused.
Do you even need to file a return if you have no "earned income" and your trading resulted in losses?
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You still have to file, in stock trading, the IRS only sees your sales on the 1099B, so you need to provide the "cost basis".

I decided not to file one year, and I got a TAX BILL for over a million, and I lost $$$! I promptly filed, and cleared that up.

Yes it does suck!

el surdo
 
Quote from Surdo:

You still have to file, in stock trading, the IRS only sees your sales on the 1099B, so you need to provide the "cost basis".

I decided not to file one year, and I got a TAX BILL for over a million, and I lost $$$! I promptly filed, and cleared that up.

Yes it does suck!

el surdo
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Wow, that does suck.
Thanks for clearing up the confusion I had.
 
This is good to know... i have heard many daytrading irs horror stories. For losses from retail accounts (scottrade, tradestation etc) it carries over 3 years corect? or is that something else?
 
Quote from djxput:

HeHe ... I learned about this one the hardway ...

Uncle sam will know; especially if you trade stocks or options ...
and really especially if you day trade.

When I first started out day trading (didnt make any money that year). But did alot of trades during one month. The IRS has all the sales - but none of the buys (wierd system). So they think you made millions (especially when you day trade).

Needless to say they dont get off your back till you file a return. And that will often screw things up for future returns etc ...

So to make a long story short YES you need to file even if you had no income and lost money in the market.


And to answer the OP question ... as far as I know you can only go 3k into the hole each year with your losses (meaning only 3k can come off your income). So then you can carry this over year and year into you use it all or until you have gains in your investing and then you can offset your gains with the previous losses. (correct me if I am wrong). I'll be doing this - this upcoming year myself :)
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Good and helpful post.
 
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