Generally, realized capital losses are first offset against realized capital gains. Losses in excess of this limit can be carried forward to later years to reduce capital gains or ordinary income until the balance of these losses is used up.

Capital gains and losses on the sale or trade of investments are classified as either short-term — if the property has been held for one year or less — or long-term on Schedule D of Form Though these two categories of capital gains and losses are subject to different rates in the event of a net gain, a net capital loss resulting from either category is directly deductible from ordinary income up to the annual limit.

Ask the Expert: Are my stock losses tax-deductible? - May. 16,

Generally, capital gains rates are lower than the rates on ordinary income. Taxpayers seeking more information on how to reduce their tax bill through by deducting stock and investment losses on their tax returns can get help from IRS Publication , Sales and Other Dispositions of Assets; Publication , Mutual Fund Distributions; and Publication , Investment Income and Expenses Including Capital Gains and Losses.

Taxpayers who may have experienced other types of financial losses may be able to take advantage of other provisions of tax law and can find help in the following publications:. Subscriptions IRS Guidewire IRS Newswire QuickAlerts e-News for Tax Professionals IRS Tax Tips More.

How to write off bad-debt losses - MarketWatch

Publication , Casualties, Disasters, and Thefts. Publication , Residential Rental Property Including Rental of Vacation Homes.

Publication , Net Operating Losses NOLs for Individuals, Estates and Trusts. Know Your Rights Taxpayer Bill of Rights Taxpayer Advocate Accessibility Civil Rights Freedom of Information Act No FEAR Act Privacy Policy. Treasury Treasury Inspector General for Tax Administration USA.