What should you be on the lookout for tax-loss harvesting?

One thing to be aware of with tax-loss harvesting is the wash-sale rule. If you or your spouse purchase the same or a substantially identical security within 30 days of selling the security for a loss, then you will not be able to deduct the capital loss on your income tax return.

Is tax-loss harvesting allowed by the IRS?

Tax-loss harvesting can be restricted. If a sale is subject to the wash-sale rule, the loss will not be recognized in the year of sale and will be deferred when the corresponding purchase is then re-sold.

How much can you save with tax-loss harvesting?

There is no limit to the number of losses that can be harvested. However, in any single tax year, losses are limited to the dollar amount of the gains recognized plus an additional $3,000 to offset ordinary income. Losses exceeding $3,000 can be carried forward and used to offset future capital gains.

How Tax-Loss Harvesting Works

Important information:

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