Can someone provide a math example of a STR strategy for a W2 employee

[William C.]

Thanks in advance for dealing with my rookie-ness. Looking for a math example for the factors outlined below. Please.

Married couple. Filing jointly.

Both are W2 employees with a combined income of $300,000.

Live in a high income tax state. Pay $40,000 in federal and state taxes, combined.

We do not qualify for REPS. If we did a STR loophole strategy. Avg stay of 7 days of less. Actively participate. We have a cost seg study performed. That generates a loss of $60,000.

Would that $60,000 loss fully offset that $40,000 in federal and state taxes we are subject to?

Would the remaining $20,000 on loss carry forward to the next tax year to offset more of our tax bill?

[Michael Plaks]

Combined W2 income of $300,000 should generate more than $40,000 in taxes, especially with state taxes added. You're looking at some wrong number to measure your tax burden.

Losses do not offset taxes, they offset taxable income. So if you really have a $60,000 loss, you would be paying taxes on $240,000 of income instead of $300,000. That may lower your tax bill by maybe 20,000.