An Interactive Guide to Capital Gains & Losses
Based on Schedule D, this tool simplifies the key tax benefits for investors, showing how holding periods and netting rules affect your tax liability.
The Two Types of Capital Gains
Short-Term Gains
Profit from assets held for one year or less. These gains are taxed at your ordinary income tax rates, which are the same rates as your wages.
Long-Term Gains
Profit from assets held for more than one year. This is where the major tax benefit lies: these gains are taxed at much lower rates (0%, 15%, or 20%).
Capital Gains & Loss Simulator
Enter your total short-term and long-term gains or losses for the year. A positive number is a gain, a negative number is a loss.
Visualizing Your Net Result
Key Rules for Net Losses
If your capital losses are more than your capital gains, you have a "net capital loss." You can use this loss to lower your other income, like wages, by up to $3,000 per year ($1,500 if you are married filing separately). This provides a direct tax benefit by reducing your overall taxable income.
If your net capital loss is more than the $3,000 annual limit, the unused portion isn't lost. You can carry it forward to future tax years. In those years, you can use the carryover loss to offset capital gains and again deduct up to $3,000 against other income. This process can be repeated until the entire loss is used up.
