Tax Loss Harvesting Explained - How To Add 14% To Your Portfolio

Tax loss harvesting may sound fancy and complicated, but I promise it’s super simple, and you’ll have a better understanding of it after watching this video. Here we’ll explore what tax loss harvesting is, why and how you’d want to do it, the rules, limits, and deadlines involved, examples, and how to avoid the infamous “wash sale” in your portfolio.

// TIMESTAMPS:

00:00 - Intro - What Is Tax Loss Harvesting?
00:53 - When To Tax Loss Harvest - Deadlines & Strategies
01:24 - Tax Loss Harvesting Limits, Rules, and Wash Sales
03:33 - Tax Loss Harvesting Examples
07:02 - Is Tax Loss Harvesting Worth It?
07:41 - When You Should NOT Tax Loss Harvest
08:36 - How To Tax Loss Harvest – Steps
09:01 - ETF Replacements
09:18 - Conclusion & Outro

// SUMMARY:

Tax loss harvesting just refers to selling investments at a loss to lower your tax burden. Simple as that.

Specifically, we’re talking about selling positions that have unrealized capital losses at the time of sale in order to offset realized capital gains (or taxable income, if you don’t have any realized gains) for that year. If used to offset realized capital gains, those gains can be short-term or long-term, the former of which are taxed at higher rates.

In other words, realized losses can be used as a credit against any realized gains during the year. We call this sale “harvesting” the loss, hence the name tax loss harvesting.

Tax loss harvesting – selling losing positions to offset gains and/or reduce taxable income – may be a useful part of your investing strategy. The tax savings from harvesting losses increase as one’s marginal tax rate increases.

Plan ahead to ensure your tax loss harvesting tactics go smoothly. Follow the steps above and decide whether or not to buy a substitute fund or hold cash for 31 days.

#investing #stockmarket #capitalgainstax

// INVEST

// SOCIAL

I appreciate all the support!

Disclosure: Some of the links above are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality content on this channel and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful.

[OptimizedPortfolio]

Do you harvest losses? If so, when and how?

[KarenDuncan-os]

I think it's important to stick to stocks that are immune to economic policies. AI stocks that have the potential to power and transform future technologies. It seems AI is the trajectory most companies are taking, including even established FAANG companies. Maybe there are other recommendations?

[MartyNextDoor]

Great video - simple and to the point. Thanks!

[speshojk]

Hey, excellent video. You mention that tax loss harvesting can offset up to 3k in capital gains or taxable income. So are you:

A. Saving only the tax liability on a 3k capital gain / 3k of taxable income (taxes on the 3k gain)
B. Saving up to 3k of tax liability on larger capital gains / total taxable income (For instance, a 10k capital gain with a 3k tax liability)

Option A is fine I guess, but option B would be a game changer! Thanks for your help.

[nicholasfelder]

Happy Holidays! As always, love the videos!

[pt]

Thanks for the quick, yet comprehensive content - much obliged!

[stephtraveler]

Very clear and to the point. Great video.

[AinzDArc]

Great video. Thank you for information.

[nithin_satheesan]

Just to clarify, if my taxable income is $100k, and if I sell a stock for a $3k loss, then my taxable income would become $97k, right?

[SnackCakes]

This was fantastic, thank you so much. I had a company go belly up so I have 5K worth of shares. I would have dropped them all off, but now I know to only end in the red for 3k.

[jasonhobbs]

Great video! The 14% increased account value… over what period of time? Thanks!

[TJ-Stackin]

Great video! I can not tax loss harvest this year because I need high NOI to buy real estate this next year. But I will use this strategy in the future.

[aftabkrishna]

Does the tax loss harvesting (
TLH) strategy have an overall impact on your tax liability? For example, if I have a realized gain into Fidelity brokerage account and unrealized loss into Vanguard brokerage account so once I use TLH strategy it would have an overall / combined effect on my total tax liability. Please let me know. Thanks in advance!

[timhicks]

Can I continue to buy other securities during the 30/31 day window. For example: can I sell PFE at a loss but continue my automatic investments in other stocks? or do I have to not buy anything during the tax loss havesting window?

[DecapitatedRobot]

As 2022 was a tough year as well as parts of 2023, it is better to "offload" all my loser stocks, or, do it in $3, 000 increments per year? Thank you!!

[kkadam]

Is it required to buy a substitute fund after selling at a loss? Does holding cash void your harvest?

[BradleyBevan-zh]

Not only does this add to the portfolio but it also keeps the money in the hands of the people

[sef]

What if I’m at a big loss on my last sell but I’m up on my current trade. Say I started year at 60k in portfolio, then I made a trade in November and have 50k in portfolio and closed the position. I opened a new position in December and is currently up 6k and expect it to continue rising. Should I sell the 6k position now and only have a realized loss of 4k for the year and pay less taxes on the gains for the trade? If I carried that 6k trade into next year wouldn’t I have to pay on that 6k?

[qrizpol]

Can you sell a stock at a loss and buy a different stock in different industry that already have in portfolio?

[kkadam]

When can someone file for Tax Loss Harvesting. Is this done same period as filing your taxes?