Long-term capital gain: If you had your investment for more than one year before selling, your capital gain is considered long-term.Congratulations - your investment has paid off! Now all you have to do is find out how this money will be treated on your income tax return - and to do that, you need to understand how the IRS categorizes capital gains. Let’s say you did all the math and realized you have a capital gain on your hands. Stock shares will not incur tax implications until they are sold. That’s because you’re not required to pay taxes for simply owning an investment. However, if you purchased a stock or other investment and haven’t sold it, you won’t need to worry about any of this just yet. If you lose more than $3,000 in a single year, you can carry forward the additional loss to future tax years. For example, if you lose more than you make, you can use up to $3,000 to reduce your overall income like wages and potentially pay less in taxes. What’s the biggest difference between a capital gain and a capital loss when it comes to tax season? Simple: A capital gain is generally taxable, while a capital loss may be tax-deductible.
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