MYTH: NO TAXES ARE OWED ON MONEY LOST IN THE STOCK MARKET
Investors who lose a lot of money might figure they can deduct those losses against their income and not have to pay anything. Well, maybe. First of all, to take any deduction at all, the stocks have to be sold, making them a capital loss. And while it is possible to deduct capital losses, $3,000 is the maximum. That’s usually not enough to cancel out other taxes. Capital losses over $3,000 per year can be carried over to other years, though, and deducted against either capital gains or income.
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