Capital Losses and Tax Deductions

Capital losses occur when the selling price of an investment is less than its original purchase price. While losses can be disheartening, they offer a silver lining when it comes to taxes.

Capital losses can be used to offset capital gains, reducing your taxable income, and potentially lowering your tax liability.

Moreover, if your capital losses exceed your capital gains, you can utilize the excess losses to offset other income, such as wages or interest, through tax deductions.

This strategy is known as tax-loss harvesting and can enhance your overall financial position by minimizing the impact of investment losses on your tax bill.

Working with a tax advisor can help you navigate the complexities of tax deductions and optimize the use of capital losses to your advantage.

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