Tax-Loss Harvesting: Is it worth looking into?

It’s the most wonderful time of year… for tax-loss harvesting.

What is tax-loss harvesting? It is the selling of securities at a loss to offset a capital gains tax liability.

Here’s what you need to know about this important topic.

1 WHO SHOULD BE THINKING ABOUT THIS?
Tax-loss harvesting is useful if you have capital gains (from another source) to offset. This is especially important for short-term capital gains, which are typically taxed at a higher federal income tax rate than long-term gains.

2 HOW DO YOU KNOW IF THIS IS WORTH LOOKING INTO?
Together, we can determine if you have capital gains from another source in a tax year.

3 WILL BIDEN’S PROPOSED TAX PLAN IMPACT TAX-LOSS HARVESTING?
No. Nothing in the current tax discussion is likely to impact tax-loss harvesting.

4 SHOULD YOU PURSUE TAX-LOSS HARVESTING ON EVERY PORTFOLIO?
Pursuing tax-loss harvesting on a single, stand-alone portfolio is relatively pointless. This strategy should be reviewed across all of your holdings and your overall financial picture to capture the greatest value.

5 WHEN IS TAX-LOSS HARVESTING MOST EFFECTIVE?
If… you have investments subject to capital gains, your tax bracket is changing, you invest in individual stocks or had a bad investment year, to name a few… this may be worth looking into.

Year-end is a great time to examine tax-loss harvesting and determine if this strategy could potentially save you money. It is also a great tool to use when markets are volatile.

 

Is tax-loss harvesting a suitable strategy for your situation?

 

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. Clearview Wealth Partners and LPL Financial are separate entities. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. No strategy assures success or protects against loss.



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