|
|
|
Did You Lose Money on Your IRA?
How to Deduct the
IRA Losses
Many investors had losses in the stock market and other
investments for the past several years. What recourse do you have if the
money you’ve invested for your retirement evaporates? The IRS may allow a
loss on your tax return.
To qualify for the deduction, you must have basis in your IRA. Your basis
is equal to the nondeductible contributions to your Traditional IRA, or
the contributions you have made to your Roth IRA. The loss is only
deductible if you withdraw all your IRA accounts and the amount you
receive is less than your basis. Traditional IRAs and Roth IRAs are
treated separately. This means that you must withdraw the funds from all
of your Traditional IRAs before any loss on your Traditional IRAs is
allowed. The same is true for your Roth IRAs.
The loss is deducted on Schedule A, Itemized Deductions, as a
miscellaneous deduction. Before you derive any tax benefit, the total of
all your miscellaneous itemized deductions must exceed 2% of your total
adjusted gross income.
|
