I have some investment loss from IRA distributions. Can I use it to offset my capital gains?

  • Please provide more details...... see my answer below.
  • If this was your ONLY IRA and you closed it AND did not take the tax deductions for your contributions you may be able to claim some of the loss.

    If you have a loss on your traditional IRA investment, you can recognize (include) the loss on your income tax return, but only when all the amounts in all your traditional IRA accounts have been distributed to you and the total distributions are less than your unrecovered basis, if any.
     
    Your basis is the total amount of the nondeductible contributions in your traditional IRAs.

    You claim the loss as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions on Schedule A, Form 1040. Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax.

    This means if you got to deduct your contributions, then you can't take the loss.
Cancel
Withdrawing Balances to Claim Losses
In order to claim a loss on IRA investments, you must withdraw the entire balance from all your IRAs of the same type. For instance, if the loss occurred in a Traditional, SEP or SIMPLE IRA, you must withdraw the balances from all your Traditional, SEP and SIMPLE IRAs (hereinafter collectively referred to as Traditional IRAs). If the loss occurred in a Roth IRA, you must withdraw balances from all your Roth IRAs in order to include the loss on your tax return


Traditional IRA Losses
You may deduct your Traditional IRA losses only if the total balance that you withdraw is less than the after-tax amounts (basis amounts) in your Traditional IRAs. Your IRA basis is attributed to non-deductible contributions and rollovers of after-tax amounts from qualified plans, 403(b) accounts and 457(b) plans. You must file IRS Form 8606 to determine the basis of the amounts you withdraw from your Traditional IRAs. Form 8606 serves also to indicate to the IRS which portion of your withdrawal is attributed to after-tax amounts and the amount that is eligible to be claimed as a loss on your tax return. Form 8606 and its accompanying instructions are available at www.irs.gov

Roth IRA Losses
The same rules apply to the Roth IRAs: claiming Roth IRA losses on your tax return is allowed only if the total of your Roth IRA balances are withdrawn and the amount withdrawn is less than the basis in your Roth IRAs.


Claiming the Loss
Taxpayers can claim the loss as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions on Schedule A, Form 1040. Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax.


So NO it couldn't offset capital gains.
    Cancel
    Contribute an answer

    People come to TurboTax AnswerXchange for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

    1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
    2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
    3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
    4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
    5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.
    Cancel