Stock Market Today

Yes, you’ll subtract your losses from your gains. However, there’s another level of complexity: short term gains (securities held less than one year) are taxed at ordinary income tax rates, while long term gains (held one year or more) are taxed at the lower capital gain rates. So…

First you’ll calculate your short term gains and losses. Subtract the losses from the gains. Then you’ll calculate your long term gains and losses. Subtract the losses from the gains. If one or the other is a net loss, you’ll offset any gain with it.

So for example, you have a net long term loss of $2000 and a net short term gain of $7000, you’ll offset the two and get taxed on $5000 short term gain. If it’s reversed, with a short term loss of $2000 and a long term gain of $7000, you’ll offset them and get taxed on $5000 long term gain. Or of you have $2000 long term and $3000 short term, you’ll get taxed on them accordingly ($2000 at the lower long term rate and $3000 at the regular rate).