If you happen pass away during this period, any remaining unused capital losses cannot be utilized or passed down to your children or other heirs. Massachusetts DOR regulations regarding the deductibility of capital losses are even more stringent than those of the IRS. At this minimal rate, it would take some 33.3 years to use up all such losses on your Federal returns. ![]() Deduct only $3,000 (yes, just $3,000) of capital losses on Schedule D of your Form 1040 return each year.Utilize such losses to offset other short-term and long-term capital gains that you realized during the year, and.Suppose that you lost $100,000 from your trading activity during the year. This often results in sudden, unplanned losses on these immediate trades, or at best, additional short-term capital gains income taxable in the current year. In April, when I inform these clients of the amounts Federal and MA income taxes that they owe from the prior year, they must scramble to sell some additional positions to generate the cash needed to cover their prior year's income tax liabilities. Instead, they reinvest that cash in additional trading activities. Most traders do not set aside cash received from the securities sold to cover their current income tax liabilities. New Hampshire residents would not pay any short-term capital gains State income tax. Ouch! Leaving you with just $47,200 after you’ve satisfied your Federal and MA income tax obligations. Massachusetts residents will have to pay MA DOR a short-term capital gains income tax of 12% or $12,000 in MA income taxes, as calculated on MA Schedule B.Ĭombined, you will pay a total of $52,800 in Federal and MA income taxes. ![]() You will have to pay the IRS $37,000 in income taxes on your trading gains, plus a Net Investment Income Tax (NIIT) surtax of up to 3.8% or $3,800 as calculated on Form 8960. This income from trading will likely push you into the 37% Federal tax bracket (the highest bracket). However, your trading activities resulted in short-term capital gains, meaning that all such income will be taxed at ordinary rates. ![]()
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