Fall Into Smarter Tax Planning

As the leaves change and the year winds down, it's a perfect time to refresh your tax strategy. Just like a crisp autumn breeze signals change, this season calls for a “financial fall cleaning.” Tax-loss harvesting can help you end the year strong and start the next on firmer ground.

Why Tax-Loss Harvesting Might Work This Fall

Imagine you've earned a $5,000 gain from Stock A but faced a $4,000 loss from Stock B. By offsetting gains with losses, you can lower your capital gains tax. If your losses exceed your gains, you can even reduce your regular income by up to $3,000 and carry forward the rest to future years.

Benefits to Highlight

• Reduce Your Tax Bill: Lowering capital gains can also reduce regular income taxes.
• Turn Setbacks Into Tax Savings: Use investment losses to yield tax benefits.
• Clear Out the Clutter: Align your investments with your financial goals.

Potential Pitfalls to Mention

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

Remember, tax-loss harvesting isn't one-size-fits-all, but when aligned with your financial goals, it can be a powerful tool. Review your portfolio before year-end and seek professional advice to ensure you make the most of this strategy. Reach out to us for a personalized review today!