# @thejoserafaelhernandez on Instagram

- **Type:** Video
- **Original URL:** https://www.instagram.com/p/C_8X3N7OsxN
- **Gondola URL:** https://gondola.cc/posts/59827359-thejoserafaelhernandez-instagram
- **Thumbnail:** https://img.gondola.cc/tr:w-,h-,fo-auto/postThumbnails/c2b6668471.jpg
- **Posted:** 2024-09-15T15:53:41.000+00:00
- **Account Owner:** Jose Hernandez (@thejoserafaelhernandez) — https://gondola.cc/thejoserafaelhernandez

## Caption

Debunking an investing myth I see often 👇🏼
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The “$3000 deduction” you hear about when it comes to tax loss harvesting only applies to your gross income 
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I’ve seen a lot of people get this mixed up with the amount of losses you can deduct from other gains that you lock in
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They’re 2 separate types of “write offs”
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There is no cap on the amount of losses you can write off against capital gains that you lock in
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For example, if you had $1 million in losses that you locked in across your taxable accounts, you could deduct the full $1 million against up to $1 million in gains that you lock in
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Where the $3k comes into play is something called the “net capital loss deduction”
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In a nutshell, this applies when you still have losses “left over” after writing off all of your losses against your gains
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In the case that you still have losses “remaining” after writing them off vs your gains, up to $3k of those remaining losses can be deducted from your gross income when you’re filing your taxes
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And if you still have losses remaining after taking the $3k deduction from your gross income, the “left over” losses “rollover” to the next tax year and the process repeats until all of your losses are “used up”
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The main benefit of tax loss harvesting is to reduce the amount of net gains you have to report from your investments in the current (and future) tax years
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The $3k deduction from your gross income is more of a secondary benefit and it’s unfortunate that amount hasn’t been adjusted for inflation ever since it came into play decades ago
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So remember, there’s no limit to the amount of losses you can use to offset capital gains
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And the $3k deduction only applies if you still have losses remaining after subtracting your losses from your gains for the tax year 
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If you found this helpful, share it with a friend and follow for more 🤝
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#investing #stockmarket #indexfunds #dividends #compoundinterest #rothira

## Stats

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## Tags

dividends, stockmarket, indexfunds, compoundinterest, investing, rothira

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