Tax Loss Harvesting

Sometimes... we make bad decisions. Luckily the USA tax code allows us to recoup some of these losses as write offs.

Two ways to save

Capital Losses can be used to offset Capital Gains or your income.

Save money for years to come!

Although there is the $3,000 limit per year to offset income, tax losses do not expire. So imagine you bought a stock this year, held on to it for 30 days, then sold it at a loss of $9,000. This means that for the next 3 years you can continue to harvest this tax loss at $3,000 per year. So unless you are always making money on your stock investments -- you should be deducting this yearly.

Wash Sales

In order to prevent traders from selling stocks, harvesting the loss, and then buying the same stock -- you must wait 30 days between sales. This means you must wait at least 30 days before harvesting capital losses.

Final Key Reminders

• - You can't use tax loss harvesting on your tax deffered accounts such as a 401k or a Roth IRA
• - Stocks/Options/Securities are subject to a 30 day waiting period before being eligble