can you claim losses on stocks? U.S. tax guide

Can You Claim Losses on Stocks?

If you're asking "can you claim losses on stocks" for U.S. federal tax purposes, the short answer is yes — but only when losses are realized and rules (like the wash‑sale rule and reporting requirements) are followed. This guide explains how can you claim losses on stocks, when losses are deductible, how they affect your taxable income, and practical steps to report them correctly. It is written for investors and beginners who want a clear, actionable overview of the tax mechanics and recordkeeping needed.

As of 2025-12-30, according to IRS Topic No. 409 and IRS guidance on Form 8949 and Schedule D, realized capital losses on stock sales are generally deductible against capital gains and, to a limited extent, ordinary income. For up-to-date specifics, consult the IRS or a tax professional.

Quick takeaway: can you claim losses on stocks? Yes — but only realized losses count, wash sales can disallow losses, and there's a $3,000-per-year ordinary income offset limit (with carryforwards for the remainder).

Key concepts

Before answering the detailed question of "can you claim losses on stocks," it's important to understand three foundational terms:

• Realized vs. unrealized losses: A loss is realized when you sell the stock (or it becomes worthless) for less than your cost basis. Unrealized or "paper" losses — declines in value without a sale — are not deductible.
• Capital asset and basis: Stocks are capital assets. Your cost basis is typically what you paid for the shares, adjusted for stock splits, dividends that affect basis, or other corporate actions. Basis determines the gain or loss when you sell.
• Holding period: The holding period (short‑term versus long‑term) affects how gains/losses are classified and netted for tax purposes.

Understanding these basics helps you answer whether can you claim losses on stocks in various scenarios.

Types of capital losses

Short‑term vs. long‑term losses

The holding‑period distinction matters when you consider how losses offset gains. Short‑term losses come from stocks held one year or less. Long‑term losses come from stocks held longer than one year.

• Short‑term losses offset short‑term gains first; long‑term losses offset long‑term gains first.
• If one side remains after offsetting, you cross‑net short vs. long amounts.

When evaluating "can you claim losses on stocks," identify the holding period for each sale to apply the correct netting sequence.

Worthless securities

A security that becomes completely worthless in the tax year can be treated as sold on the last day of that tax year. For tax purposes, that produces a capital loss equal to your basis.

• You must be prepared to document worthlessness (bankruptcy filings, liquidation notices, trading halts that render shares valueless, or other evidence).
• The IRS is strict about claims of worthlessness; keep contemporaneous records.

When reading about "can you claim losses on stocks," note that worthlessness is a special case where no sale occurred but deduction is allowed with documentation.

How losses affect your federal tax bill

Answering "can you claim losses on stocks" requires knowing the netting rules:

1. Net short‑term gains and losses against each other to get net short‑term gain/loss.
2. Net long‑term gains and losses against each other to get net long‑term gain/loss.
3. If both nets are losses, you have a net capital loss. If one is a gain and the other a loss, offset the smaller against the larger to get a single net amount.

If you end up with a net capital loss, you can use it to offset capital gains and up to $3,000 ($1,500 if married filing separately) of ordinary income per year. Excess losses carry forward.

These netting rules are the practical mechanics behind the question "can you claim losses on stocks" and how much tax relief you can expect in the current tax year.

Annual limits and carryforwards

When addressing "can you claim losses on stocks" investors must know the statutory limits:

• If your net capital loss exceeds capital gains for the year, you may deduct up to $3,000 of net capital loss against ordinary income ($1,500 if married filing separately).
• Any remaining unused capital loss is carried forward to future tax years indefinitely until used.
• Carryforwards retain their character (short‑term vs. long‑term) for future netting.

Practical implication: if you're asking "can you claim losses on stocks" and you have a very large loss year, only $3,000 offsets ordinary income this year; the rest reduces future years' tax burdens.

Reporting and required forms

Form 8949 and Schedule D

To properly answer "can you claim losses on stocks" you must report transactions on tax forms:

• Form 8949: List individual sales of capital assets (stock sales), including dates acquired and sold, proceeds, cost basis, holding period, and any adjustments (for example, wash‑sale disallowances).
• Schedule D (Form 1040): Summarize totals from Form 8949 to compute net short‑term and long‑term gains or losses and apply the capital loss limits.

Accurate reporting on Form 8949 and Schedule D is essential if you want to legitimately claim losses on stocks and avoid IRS adjustments.

Broker statements and Form 1099‑B

Brokers issue Form 1099‑B that reports sale proceeds for the year. Use 1099‑B to populate Form 8949.

• 1099‑B includes details about whether the broker reported the basis to the IRS and the holding period classification.
• Reconcile your records with 1099‑B; brokers can make errors in basis reporting, especially for shares acquired across multiple buys.

When wondering "can you claim losses on stocks," ensure your 1099‑B supports the amounts you report or prepare to explain differences.

The wash sale rule

A critical limitation to "can you claim losses on stocks" is the wash sale rule.

• The wash sale rule disallows a loss on the sale of a security if you buy a "substantially identical" security within 30 days before or after the sale date.
• The disallowed loss is added to the basis of the replacement shares, deferring the loss until that new position is sold.

Common triggers include repurchasing the same stock, buying substantially identical securities (close ETFs tracking the same index may raise questions), buying options that are substantially identical, or automatic dividend reinvestment that purchases shares within the wash‑sale window.

Practical tips regarding wash sales:

• If you sold a position for a loss and want to maintain market exposure, consider buying a different security that is not "substantially identical" or wait 31 days before repurchasing.
• Use careful recordkeeping and broker notes to track wash‑sale adjustments.

Remember: when taxpayers ask "can you claim losses on stocks," wash‑sale rules are a primary cause of disallowed losses.

Tax‑loss harvesting strategies

Tax‑loss harvesting is the practice of realizing losses to offset gains (or up to $3,000 of ordinary income), while maintaining desired market exposure.

Key points for tax‑loss harvesting when considering "can you claim losses on stocks":

• Harvest losses by selling losing positions before year‑end and use proceeds to buy a non‑identical replacement (to avoid wash sales) or wait 31 days to repurchase.
• Consider using broadly diversified alternatives or different ETF wrappers that do not meet the "substantially identical" threshold.
• Keep an eye on transaction costs, portfolio drift, and the long‑term investment plan — tax harvesting should not override sound investment decisions.

Bitget users who trade equities and other assets should integrate tax‑aware strategies and consider custody and execution benefits when implementing harvesting. For crypto holdings, Bitget Wallet and Bitget's trading tools can help track trades but remember that federal tax rules treat crypto as property (see below).

Special‑account and special‑instrument rules

Retirement accounts (IRAs, 401(k)s)

A common question: can you claim losses on stocks held inside tax‑advantaged retirement accounts? Generally, no.

• Gains and losses inside IRAs or 401(k) plans are not reported on individual tax returns.
• Losses inside a traditional IRA or Roth IRA do not produce a current deduction for the account holder, even if the account loses value.

If your retirement account suffers losses, those losses do not produce a current deduction on Form 1040. The tax rules for retirement accounts are separate from the rules that let you claim losses on stocks held in taxable accounts.

Margin accounts, short sales, and options

Special instruments alter loss timing and treatment:

• Margin accounts: Interest on margin and other costs can affect the adjusted basis and the deductibility of losses.
• Short sales: Gains and losses on short sales are generally treated as capital gains/losses, but the holding period rules differ because the sale occurs before you cover the short position.
• Options: Exercising or assigning options has specific tax consequences and can change the holding period and basis for resulting stock positions.

These instruments complicate the simple answer to "can you claim losses on stocks" and often justify professional advice.

Cryptocurrency and other non‑securities assets

Cryptocurrencies are treated as property by the IRS. When contemplating "can you claim losses on stocks" investors with crypto should note that realized losses on crypto generally follow capital‑loss rules as property transactions.

• While the wash‑sale rule historically applied to securities, whether wash‑sale treatment applies to crypto has been a gray area. As of 2025-12-30, some tax practitioners treat wash‑sale rules as inapplicable to crypto because crypto is not a security under current IRS guidance; others warn that future guidance could change this position.
• Regardless, realized losses on crypto transactions are typically reported similarly to stock transactions on Form 8949 and Schedule D, unless other specific reporting rules apply.

If you trade crypto alongside stocks on Bitget or hold crypto in Bitget Wallet, retain clear records of purchase and sale dates and bases to support deductions when answering "can you claim losses on stocks" in your tax return.

State tax considerations

State income tax treatment of capital losses can differ from federal rules:

• Many states follow federal definitions and allow the same deductions, but some have differences in carryforward rules, limits, or definitions of taxable income.
• When you consider "can you claim losses on stocks" for state tax, check your state's tax authority guidance or speak with a tax professional.

Ignoring state treatment can lead to under‑ or over‑reporting on state returns, so confirm state rules before relying on federal deductions alone.

Documentation and recordkeeping

To successfully claim losses on stocks and substantiate your return, maintain the following documents:

• Trade confirmations and monthly/annual brokerage statements.
• Broker Form 1099‑B showing proceeds and reported basis.
• Records of purchase dates and amounts to determine holding periods and basis (including reinvested dividends, stock splits, or spin‑offs).
• Evidence for worthlessness claims (e.g., bankruptcy filings, liquidation notices, trading suspension notices).
• Notes and calculations for wash‑sale adjustments and basis recalculations.

Keep records for at least three years after filing, and for longer if you have carryforwards or incomplete substantiation.

Common pitfalls and limitations

When taxpayers ask "can you claim losses on stocks," they often run into avoidable mistakes:

• Trying to claim unrealized (paper) losses.
• Triggering wash sales by repurchasing substantially identical securities within the 61‑day window (30 days before and after sale).
• Incorrect basis reporting, especially when shares were acquired in multiple lots or across brokerages.
• Failing to report transactions or reconcile 1099‑B differences, which can trigger IRS notices.
• Misunderstanding special transaction types (short sales, options, corporate reorganizations).

Being aware of these pitfalls helps you legitimately claim losses on stocks without later adjustments.

Example calculations

Here are concise numerical examples that illustrate how can you claim losses on stocks.

Example 1 — Offsetting a realized capital gain with a realized loss

• You realize a long‑term capital gain of $8,000 from Stock A (held >1 year).
• You realize a long‑term capital loss of $6,000 from Stock B (held >1 year).
• Net long‑term gain = $8,000 − $6,000 = $2,000.

Result: You still have a $2,000 net long‑term gain taxable at preferential long‑term rates. Because losses were long‑term, they directly offset long‑term gains.

Example 2 — Using a net capital loss to offset ordinary income and carrying forward remainder

• You realize a $12,000 net capital loss (after netting short vs. long) for the tax year.
• Annual ordinary income offset limit = $3,000.
• You deduct $3,000 this year against ordinary income.
• Remaining carryforward = $12,000 − $3,000 = $9,000, which you carry forward to future tax years.

Result: You can claim $3,000 this year and preserve the remaining loss for later years. This illustrates the $3,000 cap on ordinary income offsets when considering whether "can you claim losses on stocks."

Example 3 — Wash sale adjustment

• You purchased 100 shares of XYZ at $50 on May 1.
• You sold 100 shares of XYZ for $40 on June 1, realizing a $1,000 loss.
• You repurchased 100 shares of XYZ at $42 on June 15 (within 30 days after the sale).

Wash sale result: The $1,000 loss is disallowed for the sale on June 1 and added to the basis of the replacement shares. New basis for the June 15 shares = $42 cost + $10 disallowed loss = $52.

This defers the loss until the replacement shares are sold and illustrates a common reason losses cannot be claimed immediately when asking "can you claim losses on stocks."

How to claim losses — step‑by‑step checklist

Follow these concrete steps if you want to determine whether and how can you claim losses on stocks for your tax return:

1. Confirm a realized loss occurred: verify sale dates and proceeds versus cost basis.
2. Determine the holding period for each lot to classify as short‑ or long‑term.
3. Collect broker 1099‑B forms and trade confirmations for the tax year.
4. Check for wash‑sale windows (30 days before/after sales) and note any replacement purchases or reinvested dividends.
5. Prepare Form 8949: list individual sales, bases, proceeds, holding periods, and adjustments.
6. Complete Schedule D: summarize totals from Form 8949 and compute net short/long gains or losses.
7. Apply $3,000 ordinary income offset if you have a net capital loss and no capital gains to absorb it.
8. Record any remaining carryforward amount and track it for future returns.
9. Keep records of all calculations, confirmations, and broker statements for audit support.

If you use online brokerages or Bitget custodial services, export transaction histories and 1099‑B files to speed reconciliation. Bitget users can also use Bitget Wallet records for crypto activities that may produce capital losses.

When to consult a tax professional

Consider professional help for complex or high‑value situations related to "can you claim losses on stocks":

• Large or unusual losses (worthless securities, bankruptcy claims).
• Complex wash‑sale webs across multiple brokerages and accounts.
• Multi‑broker basis reconciliation (when different brokers report different bases on 1099‑B).
• Cross‑border issues or nonresident tax status affecting deductibility.
• Complex instruments: options, short sales, margin calls, or corporate reorganizations.

A CPA or tax attorney can help reconcile the details and ensure compliant reporting.

References and further reading

For authoritative guidance when verifying whether can you claim losses on stocks, consult the IRS and tax practitioners' resources. As of 2025-12-30, primary sources include IRS Topic No. 409 (Capital gains and losses) and IRS instructions for Form 8949 and Schedule D. Practitioner resources that explain implementation include publications from major tax software firms, financial services firms, and independent tax professionals.

Sources to consult (official and practitioner guides):

• IRS Topic No. 409 and Form 8949 / Schedule D instructions (IRS official guidance).
• Practitioner explanations and examples from major financial education outlets explaining wash‑sale rules, tax‑loss harvesting, and brokerage reporting.

Note: The above list is descriptive; consult official IRS documents and reputable tax professionals for up‑to‑date details.

Revision history / jurisdictional note

This article focuses on U.S. federal tax rules for individual investors. Tax law can change and state or international rules may differ. Verify current law with the IRS or a tax professional.

Practical next steps (Bitget context and call to action)

If you trade stocks or related assets and ask "can you claim losses on stocks," start by exporting detailed transaction history from your broker and Bitget Wallet, verify your 1099‑B, and maintain clear records of purchase dates and bases. For custody or trading of digital assets alongside stock portfolios, consider Bitget for integrated trading and Bitget Wallet for secure custody to keep records consolidated and simplify tax reporting.

Explore Bitget features for portfolio tracking, and consult a tax advisor to apply these rules to your specific situation.