How does it affect my taxes if I sell a stock for a loss, and how is my mutual fund taxed?

For one, you need to make sure that you avoid breaking the “Wash Sale Rule”. The wash sale rule prevents you from taking a loss on your tax return if you bought or sold the stock within 30 days prior too or after the trade date. For example, let’s say you own XYZ stock and you sell it for a loss on December 15th, you would have to wait 30 days before you can repurchase that security if you want to write off the loss. Also, if you purchased the stock within 30 days prior to the trade, the wash sale rule still applies. Please consult a tax advisor when it comes to certain investments as they may be treated differently than a common stock loss. You may be allowed to deduct up to $3000 in a capital loss against your ordinary income. Any amount over $3000 can be carried forward to the next tax year.
Mutual funds will have gains and losses within the fund throughout the calendar year. If you own mutual funds, you should check with the company to see what capital gains or losses will be distributed. This usually takes place sometime in December. This is also one of the pitfalls of mutual fund investing because you as the shareholder have no control over the gains and losses in the portfolio. It’s important to find out this information so that you can offset any capital gains if possible. In fact, you may own a mutual fund and have a loss on that fund and you still could end up having to pay capital gains due to the fund distribution.
It’s always wise to consult your tax professional or accountant with tax questions. These rules can be more complex and may not apply to your situation for various reasons.