If you looked at your email Monday morning, you learned about the first strategy to potentially avoid paying taxes on capital gains from mutual funds. A second strategy to potentially pursue is tax loss harvesting. If your advisor or broker is tax conscious, they should have taken advantage of opportunities in March to sell when the markets were down. Typically you can fund another stock or fund that is comparable (for example, selling Ford and buying GM or selling the S&P 500 fund and buying the S&P 1500 fund), so that you do not miss out when the market rebounds. You do have to be careful not to sell a fund and buy a fund that is very similar, as the IRS will not allow you to take the loss in that case. On opportunity to take tax losses may exist in your account now, which should be reviewed with your advisor, broker or tax professional. You have until the end of the year to take losses.
Year End Tax Planning Tips Part 2: Tax Loss Harvesting
November 18, 2020|