Oh interesting. I was starting to think it was just proportional, and therefore the wash sale would only trigger on the reinvested shares, thereby still allowing you to TLH on anything you sold off minus the automatic reinvestment.
This is true within a taxable account. If you reinvested dividends to buy 20 shares and then sell 100 different shares for a loss, you still get to claim the full loss for 80 of those shares. You then add the disallowed loss on the other 20 shares you sold to your basis for the 20 dividend reinvestment shares, which allows you to get the benefit of that loss when you eventually sell those other 20 shares.
If those 20 reinvested shares are in your IRA instead of a taxable account, there is no basis to adjust; you simply lose out on the benefit of harvesting losses on the first 20 shares you sold in your taxable account.
Since you are a pro at this, how complicated is paying attention to this correctly? Is the juice worth the squeeze?
Harvesting losses can definitely be worthwhile. It offsets any capital gains first, and then up to $3,000 of the remainder can be used to lower your tax at your regular marginal rate. Anything left after the $3,000 limit carries over to the next year.
It doesn't need to be that complicated. At a minimum you should turn off automatic dividend reinvestment in your retirement accounts for any fund that you also own in your taxable account. Take a look at whether there are any loss harvesting opportunities before you go ahead and manually reinvest that money.