ROTH-IRA loss – how to deduct?
I have an unusual problem with respect to ROTH-IRA and you might be able to guide me in the right direction.
Total = $21,500 was contributed in the last five years. My age is 26 years.
My account was completely wiped out after trading one stock warranty (KMI.WS). As of March of this year it literally became $00.0.
How do I take the loss incurred in ROTH-IRA?
Do I have to wait until I reach the age 67 to realize the loss?
I did not get any brokerage statements, other than monthly statements.
Do I have to close the ROTH-IRA account to get 1099 statement or some kind as proof for IRS?
Which Tax forms do I to file and in which tax line item, this loss gets deducted?
Which tax year, I can take this loss? 2016 or 2017 or some other tax year?
I really appreciate your help.
Permalink Submitted by Alan - IRA critic on Thu, 2017-03-30 19:45
Does your Roth custodian agree that the value is 0? If you request a total distribution of your Roth IRA (assumed to be your ONLY Roth IRA) you will get a 1099R reporting the amount of the distribution and showing a total distribution. If the 1099R shows 0, you will report the distribution on Form 8606 showing a basis of 21,500 on line 22. You now have a documented 21,500 loss and you can claim that as an itemized deduction on Sch A. This form of loss is subject to a reduction of 2% of your AGI for 2017. If your AGI was 100k, then your loss would be 19,500. You must itemize your deductions overall, so the benefit is limited to the amount your itemized deductions in total exceed your standard deduction. Therefore, you would have to carefully consider all deductions you are eligible to itemize to get the most benefit. This does not prevent you from starting a new Roth IRA later on. At the least, you should not make any 2017 contribution, but you should be able to start contributing again for 2018 and keep the same 5 year holding period from the year of your first prior Roth contribution. However, your Roth has will have been applied to the deduction, so you would have no Roth basis carried over to your future Roth accounts.