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emptying a roth ira account
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if you have multiple accounts, you have to empty them all before you can deduct any losses. your loss is not a capital loss, its a deduction. it is calculated based on the total amount you have withdrawn from all your roth ira's, minus the total basis. it will be subject to the 2% agi treshhold (i.e.: if your agi is > 100k, none of it is deductible, and you have to itemize to get it). bottom line - think twice. summarizing the discussion in comments: if you have a very low agi, i would guess that your tax liability is pretty low as well. even if you deduct the whole $2k, and all of it is above the other deductions you have (which in turn is above the standard deduction of almost $6k), you save say $300 if you're in 15% tax bracket. that's the most savings you have. however i'm assuming something here: i'm assuming that you're itemizing your deductions already and they're above the standard deduction. this is very unlikely, with such a low income. you don't have state taxes to deduct, you probably don't spend a lot to deduct sales taxes, and i would argue that with the low agi you probably don't own property, and if you do - you don't have a mortgage with a significant interest on it. you can be in 15% bracket with agi between (roughly) $8k and $35k, i.e.: you cannot deduct between $160 and $750 of the $2k, so it's already less than the maximum $300. if your agi is $8k, the deduction doesn't matter, eic might cover all of your taxes anyway. if your agi is $30k, you can deduct only $1400, so if you're in the 15% bracket - you saved $210. that, again, assuming it's above your other deductions, which in turn are already above the standard deduction. highly unlikely. as i said in the comments - i do not think you can realistically save on taxes because of this loss in such a manner.
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