Qualifying for a tax deduction
Only in very rare situations can you deduct losses in your Roth IRA account. To qualify for the deduction, you must close all of your Roth IRA accounts, including Roth IRA accounts that have profits.
The value of your Roth IRA from the previous year or at any point during the time the account was open does not matter. You must show a loss from your tax basis in the account.
Figuring your tax deduction
Your deduction is equal to the amount by which your tax basis exceeds your total withdrawals from your Roth IRAs. Your tax basis is the total amount of your contributions to the Roth IRA because these contributions are made with after-tax dollars.
For example, if over the years you have contributed $25,000 to your Roth IRAs but receive $15,000 when you close all these accounts, you would have a net loss of $10,000.
