Tax loss harvesting is the practice of selling an asset that has experienced a loss. The sold asset is replaced by a similar one, helping to maintain your risk level and your expected returns. By realizing, or “harvesting” a loss, you can:
- Offset taxes on realized capital gains.
- Reduce tax liability by reducing your income.
You could benefit from Tax Loss Harvesting+ if…
- You are investing in a taxable investment account.
- You plan to donate to charity or leave your assets to your heirs.
- The IRS allows you to offset your realized capital gains with realized capital losses.
- The IRS allows you to reduce up to $3,000 from your ordinary income.
We don’t recommend Tax Loss Harvesting+ if…
- Your future tax bracket will be higher than your current tax bracket.
- You can currently realize capital gains at a 0% tax rate.
- Under current law, this may be the case if your taxable income is below $39,375 as a single filer or $78,750 if you are married filing jointly.
- You are planning to withdraw a large portion of your taxable assets in the next 12 months.
- You risk causing wash sales due to having substantially identically investments elsewhere.
Convert or Recharacterize—What’s the Difference For Your IRA?
If conversions and recharacterizations are foreign to you, don’t worry. We’re here to help you decipher IRS jargon and learn the differences between the two.
The Benefits of Tax Loss Harvesting+
We’ve automated tax loss harvesting which can help you save on taxes over time.
How to Do a Direct IRA Transfer
If this is your first direct IRA transfer, don’t worry. We help process direct IRA transfers every day, and we’re here to make it as easy for you as possible.
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