How to Show 401k Losses on My Taxes
- 1). Calculate the tax basis of your 401k account. If you have a traditional 401k account and have not made any nondeductible contributions (which are rare), your tax basis is $0, and you cannot claim a 401k loss on your taxes. If you have a Roth 401k, all of your contributions are nondeductible, so the tax basis of your account is the amount you have contributed.
- 2). Subtract the value of all the distributions you have taken from your 401k plan, including the distribution you take to close the account. For example, if you made $50,000 in after-tax contributions to your 401k plan and had received only $40,000 in distributions, you would have a loss of $40,000.
- 3). Add the value of any other miscellaneous deductions that you have to the value of your 401k losses deduction. Report the loss as a miscellaneous deduction on your Schedule A list of itemized deductions.
- 4). Subtract 2 percent of your adjusted gross income form your total miscellaneous tax deductions. For example, if your 401k losses are your only miscellaneous deduction, you have a loss of $10,000 and you have an adjusted gross income of $30,000, you would have $9,400 deducted from your taxable income.