Embrace Fall with Smart Tax Strategies

As the leaves change and the year winds down, it’s the perfect time to reflect on your financial strategies. Just like a fall cleanup, refreshing your tax approach now can pave the way for a strong end to the year and a stable beginning to the next. Consider incorporating tax-loss harvesting into your financial toolkit.

Why Tax-Loss Harvesting Might Work This Fall

Simply put, tax-loss harvesting allows you to sell investments at a loss to reduce your taxable income. For example, if you have a $5,000 gain from Stock A and a $4,000 loss in Stock B, tax-loss harvesting helps you offset these gains and reduce your tax bill.

Turn Setbacks into Tax Savings

Investment losses don't have to weigh you down. Use them to your benefit by lowering capital gains and potentially reducing your regular income taxes by up to $3,000, with the ability to carry forward excess losses for future benefits.

Clear Out the Clutter

Just as you tidy up your garden for fall, align your investments with your goals by clearing out underperformers. This strategy not only helps with tax savings but refines your investment portfolio for better alignment with your financial objectives.

Potential Pitfalls to Watch Out For

Beware of the wash sale rule, which prevents you from repurchasing the same investment within 30 days if you want to claim the tax loss. Also, remember the benefits might be limited if you have low gains or are in a lower tax bracket. Lastly, don’t hold on to losing investments based on emotion—stay strategic and objective.

While tax-loss harvesting is a versatile tool, it’s not one-size-fits-all. Take the opportunity to review your portfolio before the year ends and seek professional advice to see how this strategy aligns with your goals. Connect with us for a personalized review and take charge of your financial future today!