Tax Harvesting IRA With Cash Long Term Capital Loss

[CatinKS]

I sold a cash mutual fund that rebounded to my original cost basis less the dividends. In short, my long-term dividends loss was 5k. Can I sell any IRA funds for tax harvesting vs the mutual fund cash trade? Honestly, have never touch any retirement money, living on cash money and some part-time employment. When I look at my IRA accounts, the funds are not broken down as long term or short-term income gains. Are Cash and IRA accounts separate, or can this be combined come April 2025 tax season? I'm in the 10% tax bracket, due to my living off of my cash accounts. Yes, I could ask a CPA this question, but I am sure it is so obvious of an answer thought I would ask my friends here.

 

[SevenUp]

I don't understand "long-term dividends loss". Did you mean "long-term capital loss"?

Gains and losses within an IRA have no* effect on your taxes.


*With the rare exception of wash sales involving the same investment in both your taxable and IRA accounts.

 

[Sunset]

People here can answer the question, but you need to be more precise:

What did you pay to buy the cash mutual fund. ?
What price did you sell it at. ?
Where was this cash mutual fund, as in was it in an IRA or Roth or 401K or taxable brokerage account. ?
All those affect the capital gains.

The dividends you got each year are a separate issue.

 

[RunningBum]

If you don't have a capital gain to offset the capital loss, you get to deduct $3000 of regular income. The remainder of the loss carries over to the next year.

I guess this was a brokered CD that you sold in the market? I'm not familiar with that to know if it counts as a capital loss. SevenUp's post is spot on about all of this.

 

[CatinKS]

If you don't have a capital gain to offset the capital loss, you get to deduct $3000 of regular income. The remainder of the loss carries over to the next year.

This is very helpful response. Will help with CD cash interest and any IRA that I sell.

 

[PaunchyPirate]

income generated by the sale of funds in a traditional IRA is taxed when that money is transferred out of the IRA account. It is taxed as normal income. It cannot be used to offset a capital gain or loss in a non-IRA account to minimize taxes. There is no concept of tracking cap gains or losses in an IRA. It is just regular income when it comes out of the account.

 

[Gotadimple]

Anything you hold in your Traditional IRA is held without taxation until you take money from the IRA. You cannot claim capital gains/losses for holdings in your IRA account.

When you take a distribution it will be taxed at your regular income tax rate (subject to certain adjustments for post-tax deposits made, if any). See form 8606 for details.

 

[pb4uski]

Please elaborate what a cash mutual fund is. It sounds like a money market fund, in which case they are all at a $1 per share constant price so there would be no capital gain or loss on a sale.