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Should you drain your IRA for a tax loss?
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After the recent dismal performance of the stock market, you may be looking for ways to recoup any market lossesyou might have. Perhaps you've even read that you can deduct IRA losses. Before you rush to cash out your IRAs, you should understand what's involved.

While investment losses inside IRAs are typically not deductible, in some cases you can take a write-off when you close accounts you funded with after-tax money.

IRA losses are a miscellaneous itemized deduction subject to an income limitation. You can deduct losses only to the extent that your total miscellaneous deductions, including IRA losses, exceed 2% of your income. Before you close your IRAs, it's important to estimate how much of your IRA loss will be limited by the 2% income threshold. Also keep in mind that, depending on how you reinvest the money, you could lose the opportunity to shelter any future earnings from tax.

The rules in this area are complex, and planning is essential to get the best tax results.

Remember, money saved is money earned. 

We hope our tax tips have benefited you in your tax planning over the past year.  We would like to help you maximize your tax savings. Give us a call at 617-678-4021 for tax-cutters suited to your specific situation.

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