Fall Into Smarter Tax Planning with Tax-Loss Harvesting

As the leaves change and the year winds down, it's the perfect moment to refresh your tax strategy. Just like a fall clean-up prepares your home for the season ahead, tax-loss harvesting can tidy up your portfolio and bolster your financial well-being.

Why Consider Tax-Loss Harvesting This Fall?

Tax-loss harvesting allows you to offset gains with losses. Let's say you have a $5,000 gain from Stock A and a $4,000 loss from Stock B. You can use this loss to reduce your taxable gains. If your losses exceed your gains, you can reduce your regular income by up to $3,000 and carry any additional loss forward to future years.

Benefits of Tax-Loss Harvesting

• Reduce Your Tax Bill: Lower your capital gains and potentially reduce regular income taxes.
• Turn Setbacks Into Tax Savings: Use investment losses as tax benefits.
• Clear Out the Clutter: Align your investments with your financial goals as part of your fall clean-up.

Be Aware of Potential Pitfalls

• Wash Sale Rule: A 30-day repurchase restriction can nullify a loss claim.
• Limited Benefits in Some Situations: Low gains or a lower tax bracket can minimize impact.
• Emotional Investing Risks: Avoid holding underperformers based on hope rather than strategy.

Remember, tax-loss harvesting is not a one-size-fits-all solution but can be powerful when aligned with your financial goals. Review your portfolio before year-end and seek professional advice to ensure you're on the right path. Connect with us for a personalized review and make the most of this strategy!