gwilks98

Do you have to itemize your deductions in order to claim a loss on your tax forms regarding the sale of stock at a lower price than that at which it was purchased?

Does the same rule apply to stock options?

Anyone know?

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zippyjuan

Yes you do need to itemize to claim that deduction.

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gwilks98

Do you know if other securities like options apply?

zippyjuan

Yes. You probably also have to fill out a Schedule D.

Chgoman

Stock options are an interesting beast. You have to report them on Schedule D along with your other investment gains and losses. Here's an interesting point. Options are not currently (and haven't until this point) reported by brokerage firms to the IRS on form 1099, so they have no idea if you ever even traded options. Obviously not legal, but I've know people that just forgot to report gains from options on their return...

gwilks98

So what do I do? I lost about a grand last year in options. (No real gains.) Should I put it on the return, and if so, how?

guiseppewv

No you don't. You can use form 1040 and fill in box 13a but you do have to fill out and attach schedule D to your return. Itemizing means you filled out Schedule A instead of taking your standard deuction, and this is not required to write off stock losses. I've written off stock losses when I have itemized and I have written stock losses off when I did not itemize. You are limited to $3,000 worth of losses in 1 year but you can carryover the rest to the next year. Note: You need to keep track of the amount you carryover b/c uncle sam will not unless you try to claim more of a carryover than you actually had.

Hope this helps.

gwilks98

It did, thanks. In addition to what you wrote, you can write off losses on expired options provided it wasn't a washout sale. You do need to write an X in for the sale description though.

zippyjuan

I forgot to include my Schedule D this year and got a letter asking for it which delayed my refund. I itemize my return. Everyone should have their taxes done by now though. If you asked for an extention, you were still required to make your payment of taxes owed by the 15th anyways.