Tax Gain/Loss Havesting Question

[Psychstache]

Hey Forum Dwellers,

I had a (I think) quick question about capital gains and losses.

Circumstances: I have some capital gains this year (LTCGs and Dividends [mostly qualified]), and I am currently within the 15% tax bracket. I was listening to an end of year episode of a podcast that talked about considering tax loss harvesting if it made sense. I wanted to know if any losses this year would be applied as a counterbalance to my gains (thereby having no effect on my tax bill) or is it applied to my taxable income (thereby cutting my tax bill by 15% of the amount of the loss)?

Thanks in advance!

[tj]

I don't have any losses at the moment.

If you do have losses, then yes they would counterbalance gains (or if no gains, ordinary income, up to $3000/year max)

[Cheddar Stacker]

Wait until January. They reduce capital gains first but you will pay 0% tax on those anyway. Doing it in 2015 will allow you to reduce ordinary income instead, reducing your tax bill by 15% of the loss.

[Psychstache]

Wait until January. They reduce capital gains first but you will pay 0% tax on those anyway. Doing it in 2015 will allow you to reduce ordinary income instead, reducing your tax bill by 15% of the loss.

Would it not be offset by 2015's dividends?

[Cheddar Stacker]

Wait until January. They reduce capital gains first but you will pay 0% tax on those anyway. Doing it in 2015 will allow you to reduce ordinary income instead, reducing your tax bill by 15% of the loss.

Would it not be offset by 2015's dividends?

Nope. It offsets capital gains first, then it reduces total taxable income.