Question

Short term capital gains

Forum|Forum|5 years ago
May 3, 2021
2 replies
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So throughout the year I started day trading I hit it big on one trade and sold it. I than reinvested that money and took major losses. How will my tax’s at the end of the year look am I still on the hook for paying short term tax on that one trade that made money or will my overall portfolio be taxed at the end of the year. Hopefully I did not really screw myself here.

H

HelenC12

Your total capital gains for the year minus your total capital losses results in either a net capital gain or a net capital loss.

If the result is a net short term capital gain (gain on assets held one year or less) is taxed as ordinary income.
If the result is a net long term capital gain (gains on assets held more than one year) is taxed at a more favorable rate than ordinary income.
Net losses are deductible, but only up to a maximum of $3,000 ($1,500 if married filing separately). Any capital losses you couldn't deduct this year can be carried forward and deducted on future tax returns. This is called a capital loss carryover.

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