First time tax loss harvesting

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tvent
Posts: 17
Joined: Fri May 20, 2011 6:37 am

First time tax loss harvesting

Post by tvent » Sun Nov 17, 2019 5:48 am

I'm looking for advice on getting started with tax loss harvesting.

Over the last couple of years I've contributed to a taxable account after maxing out my tax deferred retirement accounts. The entire taxable account is in Vanguard Total Stock Market Index Fund Admiral shares with dividends reinvested.

I am currently working and in a high income tax bracket. I would like to start tax loss harvesting, having not done any up until this point. I plan to stop automatically reinvesting dividends per what I have read about tax loss harvesting. How do I get started? What do I have to do differently since the account was reinvesting dividends?

livesoft
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Re: First time tax loss harvesting

Post by livesoft » Sun Nov 17, 2019 5:57 am

You have to sell at a loss and fill out a your tax return to show that sale. I think that those are the only things you have to do differently. You should buy replacement shares in a similar, but not substantially identical investment, too.
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RickBoglehead
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Re: First time tax loss harvesting

Post by RickBoglehead » Sun Nov 17, 2019 6:03 am

tvent wrote:
Sun Nov 17, 2019 5:48 am
I'm looking for advice on getting started with tax loss harvesting.

Over the last couple of years I've contributed to a taxable account after maxing out my tax deferred retirement accounts. The entire taxable account is in Vanguard Total Stock Market Index Fund Admiral shares with dividends reinvested.

I am currently working and in a high income tax bracket. I would like to start tax loss harvesting, having not done any up until this point. I plan to stop automatically reinvesting dividends per what I have read about tax loss harvesting. How do I get started? What do I have to do differently since the account was reinvesting dividends?
Does your taxable account even have losses?
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lakpr
Posts: 3064
Joined: Fri Mar 18, 2011 9:59 am

Re: First time tax loss harvesting

Post by lakpr » Sun Nov 17, 2019 7:49 am

You also need to turn the basis tracking in your taxable account to "Specific ID". With other methods such as Average Cost, FIFO, LIFO you may not see lots with losses at all. Especially this year...

KingRiggs
Posts: 317
Joined: Wed Dec 12, 2018 12:19 pm
Location: Indiana

Re: First time tax loss harvesting

Post by KingRiggs » Sun Nov 17, 2019 2:19 pm

RickBoglehead wrote:
Sun Nov 17, 2019 6:03 am
tvent wrote:
Sun Nov 17, 2019 5:48 am
I'm looking for advice on getting started with tax loss harvesting.

Over the last couple of years I've contributed to a taxable account after maxing out my tax deferred retirement accounts. The entire taxable account is in Vanguard Total Stock Market Index Fund Admiral shares with dividends reinvested.

I am currently working and in a high income tax bracket. I would like to start tax loss harvesting, having not done any up until this point. I plan to stop automatically reinvesting dividends per what I have read about tax loss harvesting. How do I get started? What do I have to do differently since the account was reinvesting dividends?
Does your taxable account even have losses?
I’d be curious about that as well. If you’ve invested in the past few year as you say, there are not many losses to be found if you’re investing in US equities...
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