Just a quick question, if I lost money in 2022 from the stock market and i file my losses will I get an increase in my tax refund?

[Hal_Al · Accepted solution]

Probably.  You may deduct, up to, $3000 of net losses against other income.  That usually reduces your taxable income, reducing your calculated tax and increasing your refund.  But it depends on a lot of other information. 

But the question is academic.  If you had "realized" capital losses in 2022, they must be reported  on your 2022 tax return.  If the losses were not realized (you didn't actually sell the stocks), then you cannot report a "paper loss" on your 2022 tax return. 

[Carl]

If I lost money in 2022 from the stock market and i file my losses will I get an increase in my tax refund?

Maybe. Maybe not. It depends on two main factors.

1. What your overall tax liability is, based on your taxable income. Line 24 of the 1040.

2. How much you had withheld from your paycheck, and how much you paid in quarterly taxes each quarter. Line 33 of the 1040.

If you did not have enough withheld from your paychecks and/or did not pay enough with each quarterly tax payment, it could potentially just reduce what you owe. Whereas if you had to much withheld from each paycheck or paid more than you needed to with each quarterly tax payment, it could increase the amount you get refunded.

On your tax return, the tax you already paid in during the year is on line 33 of the 1040. That line includes any withholding from your W-2 income, any quarterly tax payments you made to the IRS, and any other payments made on your behalf by others (such as someone who issued you a 1099-R for example.)

Your tax liability is on line 24 of the 1040. The difference between those two lines determines if you get a refund, owe more tax to the IRS, or if those numbers match (which is rare), break even.