If you lose $100 in the stock market and then made back the $100, do you have to pay taxes on it?
(Or could you say that you didn’t make any money in the stock market and so you don’t have to pay any taxes?)
Answer:
It depends. If it happened in the same calendar year, then no, you wouldn’t owe any taxes on it, since your loss would offset your gain. The only problem with that would be if you sold a stock at a loss and then bought the same stock back within a 30 day period. This is called a “wash sale” which the IRS dissallows the loss from. If it happened in 2 different years then you would possibly owe taxes on the $100 that you made back. If you have a loss on a stock you can deduct the loss, up to a maximum of $3,000 per year ($1,500 if married filing separately). The excess above the $3,000 you could carry forward and use it at $3,000 per year, or offset the loss against future gains. You would have to report both the $100 loss and the $100 gain though, but if you did it in the same year, your net loss/gain would be zero, and no taxes owed on it.
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