Q. I understand that $3,000 can be deducted from our income annually. How do I claim this loss?
A. In order to claim (deduct) a capital loss, on your tax return, you must "realize" the loss. Assuming you have no capital gains to off set your losses, you need to sell just enough stock to to realize a $3000 loss.
Be aware, you are not allowed to claim the loss, if you bought the same stock within 30 days before or after the sale that realized the loss. This is known as a wash sale and the loss, on a wash sale is is not deductible, even against capital gains.
Q. How do I max out the stock losses on underperforming stocks?
A. You sell just enough to realize a $3000 loss. Any net loss exceeding $3000 can be carried forward to the next tax year (and beyond, if needed). So, if you have decided to get rid of a loser stock, the tax deduction, if more than $3000, will not be lost. It will just be claimed later.
