We all hate to lose money on our investments. As long as you don't have to sell stock right now you can ride out the losses with hopes of a recovery. Those of you who did need the money this year or who decided to take your lumps, can minimize those losses by writing them off when you file your 2008 tax returns.

There are actually two parts of the IRS tax code that can apply. The most obvious is the rules for writing off capital losses. Another alternative is available if you had to abandon stocks or were a victim of an investment scam. I'll take a brief look at both.

If you have an investment loss you can write off up to $3,000 (up to $1,500 if you're married filing separately), but you first must offset any capital gains with your losses. For example, suppose you sold your stocks in 2008 with a total capital gain of $500 for the year and a total capital loss of $5,000. You would write off the first $500 of the capital loss against the capital gain and have $0 capital gains this year. Then you could write off the next $3,000 against your regular income. You would then have $1,500 left over. You could then carry over that $1,500 for write offs on your 2009 taxes. For more details about how to handle your loss, read IRS Publication 550's chapter on "Sales and Trades of Investment Property."