Author Topic: Tax Gain/Loss Havesting Question  (Read 2521 times)

Psychstache

  • Handlebar Stache
  • *****
  • Posts: 1144
Tax Gain/Loss Havesting Question
« on: December 27, 2014, 06:11:32 PM »
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

  • Handlebar Stache
  • *****
  • Posts: 1382
  • Age: 35
  • Location: Maui
    • Arcadia Power
Re: Tax Gain/Loss Havesting Question
« Reply #1 on: December 27, 2014, 06:14:54 PM »
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

  • Magnum Stache
  • ******
  • Posts: 3718
  • Age: 42
  • Location: USA
Re: Tax Gain/Loss Havesting Question
« Reply #2 on: December 27, 2014, 06:18:39 PM »
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

  • Handlebar Stache
  • *****
  • Posts: 1144
Re: Tax Gain/Loss Havesting Question
« Reply #3 on: December 27, 2014, 06:51:18 PM »
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

  • Magnum Stache
  • ******
  • Posts: 3718
  • Age: 42
  • Location: USA
Re: Tax Gain/Loss Havesting Question
« Reply #4 on: December 27, 2014, 07:26:33 PM »
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.