How to Deduct up to $3,000 in Stock Losses

2022 was a challenging year for stocks. The S&P 500 (SPY) fell 20% and the tech heavy NASDAQ (QQQ) fell 34%, its worst year since the financial crisis in 2008.

While its disappointing for stocks to have a down year, here’s some good news. Investors who sold losing stocks in 2022 may be eligible for tax savings. This is due to a simple but powerful tax exemption offered by the IRS.

Here are some more details from

Tax-loss harvesting is a way to cut your tax bill by selling investments at a loss in order to deduct those losses on your taxes. Deducting those losses can offset some or all of the capital gains tax you might owe on other investments that you sold for a profit.

  • Tax-loss harvesting involves selling an investment at a loss in order to offset the taxes resulting from a capital gain.
  • Typically, the asset sold at a loss is replaced with a similar investment after a certain time frame.
  • When capital losses are greater than capital gains, investors can deduct up to $3,000 ($1,500 if married filing separately) from their taxable income.
  • If net losses for a certain year exceed $3,000, the balance can be carried over and deducted on future returns.
  • Typically, the asset sold at a loss is replaced with a similar investment after a certain time frame.
  • Only available to taxable accounts, IRA accounts not eligible.

Now that tax season has arrived, this is a good time to take a closer look at taxable brokerage accounts to determine if you qualify. This process is actually quite simple.

Form 1099-B: taxable brokerage accounts create an annual 1099-B form that documents all capital gains and losses on the account. This form can be used for tax purposes to determine if an investor is eligible to deduct stock losses.

Disclaimer: This is not investment advice. This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.


Michael Vodicka

Michael Vodicka is the president and founder of the Vodicka Group Inc., a licensed investment advisor (Series 65) and a financial journalist.