Using Investment Losses to Reduce Your Tax Bill

Using Investment Losses to Reduce Your Tax Bill

Tax-loss harvesting is a strategy used to produce tax savings where an investment that has declined in value is sold at a loss, and a similar investment is purchased simultaneously to maintain the portfolio’s investment mix – risk and expected return. To use the loss for tax purposes, i.e., avoid a wash sale, there is a waiting period of at least 30 days before the original investment can be repurchased. Since buys and sells in retirement accounts are not taxable, tax-loss harvesting is implemented in non-retirement accounts.

The losses realized through tax-loss harvesting can be used to reduce an investor’s taxes in the following scenarios: (more…)

A refresher on capital gains and losses

This time of year, most of us are thinking about taxes.  But with Congress frequently changing the tax law, it’s not always easy to remember how specific rules are applied.  Fortunately, the IRS has published a recent list of tax tips relating to capital gains and losses to help remind us of some of those rules.  You can check out the list here.

It’s a great refresher for all of us!