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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11813
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am on SSDI. past 7 years I have stock market losses of

Customer Question

I am on SSDI. For the past 7 years I have stock market losses of about $30,000. Can I get a refund for those losses? Please respond. Thank you very, very much.
Marlon ********
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi Martin,

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I hold a JD (Juris Doctorate, a doctoral degree in the law), concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from Stetson School of Business and Economics, as well as CFP and CRPS designations.

I can help here

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Expert:  Lane replied 1 year ago.

I'm so sorry, but the way this works, ... When you sell a stock or other capital asset, you'll either have a gain, a loss, or break even (based on what you PAID for the stock)

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BUT what this does is (lets say you sell for less that you have in it) create a loss that can be use to offset other capital GAINS ... and then each year you can up to $3,000 of that loss against OTHER taxable income

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You get to do that every year until the loss is used up.

Expert:  Lane replied 1 year ago.

The problem for you MAY be that if SSDI is your only income and you don't HAVE enough for it to be taxable income ... then you on't have any taxable income to use this loss against.

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AND, I know that this isn't what you were hoping to hear today, but selling right now while EVERYTHING'S down might not be the best thing in the long run.

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Markets always act like this when we're in the middle of so much uncertainty ... Once we have a presidential election and all of that institutional money that's on the sidelines right now because of all the uncertainly comes back in ... we'll see a very large correction back up.

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Depending on what you're in, selling right now might be locking-in what turns out to be a loss on paper, that self corrected.

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Expert:  Lane replied 1 year ago.

But regardless of all that, ...

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(1) You will have a loss only if you sell for more than you have in it ... (and reinvested dividends can even raise that number, making your losses less)

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(2) you must have other capital GAINS to USE that loss (except that you CAN use up to 3000 per year against ordinary income) and then you carry that loss forward every year until used up

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(3) If you don't have any taxable income at all, then you really can't use the loss (until you do have taxable income ... it's simply carried forward for another year).

Expert:  Lane replied 1 year ago.

Please let me know if you have any questions at all

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Lane

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Expert:  Lane replied 1 year ago.

Ok I still don't see you coming back into the chat here

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Hope this has helped ... Again, please let me know if you have any questions at all

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If this HAS helped, (and you don't have any other questions on this), I'd really appreciate a positive rating (using those stars on your screen) … That's the only way I'll be credited with a portion of what you've paid JustAnswer.com

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Thank you,

Lane

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Expert:  Lane replied 1 year ago.

Hi,

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I'm just checking back in to see how things are going.

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Did my answer help?

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Please let me know if you need more here

And if not, I'd appreciate a positive rating (using the stars on your screen). That's the only way JustAnswer will credit me with a portion of what you've paid them.

Thank you,

Lane

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Expert:  Anne replied 1 year ago.

Hi Martin

I'm Anne. I've been preparing taxes for 27 years and I wanted to add a clarification for you.

While it's true that you can not net the loss from the sale of stock against SSDI income, you will still need to file a tax return for every year that you sell stock, and you may be able to use that loss in other years.

In most cases, when someone sells stock , only the sale price is reported to the IRS. You will receive a 1099B form at the end of the year showing all of t he stocks that you sold and the potential gain . The IRS also gets a copy of this form.

What is generally NOT reported on the 1099B form is what you purchased the stock for, thus creating a false amount of tax owed. It is up to you to prove to the IRS that you sold the stock at a loss.

You will do this by filing Form 8949 (https://www.irs.gov/pub/irs-pdf/f8949.pdf)

In any year that you do not sell stock, if you are still carrying over any portion of that loss, you will want to file a tax return to retain that unused loss. By filing the return, you retain that loss in case you still have stock you haven't sold, or if your life circumstances change (you get married and your spouse works, you win the lotto, etc. ) or if you continue to buy and sell stock.

If you have any questions, please post them here and I'll be notified

If this answer has helped you, please rate positive (by checking the stars)

It is ONLY through positive ratings that we are compensated for our time and knowledge

Thank you for choosing justanswer.

Expert:  Lane replied 1 year ago.

Did you see my answer?

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While the information above is a true statement, (of course you'd have to file a return to a gain, loss, or report any OTHER transaction) the issue here is that the losses don't really do you any good unless you have taxable income to use the loss against.

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Let me know if you have questions.

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Lane