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How You Can Lose Money on Paper And Still Win at Tax Time Like RomneyQuicklink submitted by Amanda Lang Permalink |
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We're programmed to hate losses. A loss tends to mean that you did something wrong, made a poor move or chose the ill-advised option. But in the tax world, a loss isn't always a bad thing. Losses on paper sometimes means a win at tax time -- just ask Mitt Romney. Romney's 2010 federal income tax returns resulted in a fairly low tax burden considering the amount of reportable income; tax professionals were quick to speculate that Romney benefited from a net operating loss (NOL) in a prior year. Most taxpayers associate NOLs with businesses, not individuals. But that would be a mistake since under the right circumstances, NOLs can benefit individual taxpayers, too. Under the Tax Code, a NOL results when your tax deductions exceed your taxable income before you deduct your personal exemptions. In other words, if line 41 on your federal form 1040 (or line 39 of your federal form 1040NR)... |
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