Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

U.S. Investor End of Year Tax Loss Harvesting and Other Strategies

Stock-Markets / Investing 2009 Dec 15, 2009 - 08:41 AM GMT

By: Nilus_Mattive

Stock-Markets

Best Financial Markets Analysis ArticleSince I’m not only doing the usual holiday running around, but also trying to prepare for an upcoming three-week trip to India, I’m acutely aware of just how hectic this time of the year can be.

But I also recognize that this is precisely one of the most important times for making moves that could significantly impact your finances, too.


I’m talking about relatively simple moves you can make that might otherwise get lost in all the other things on your personal task list.

For Example, Now Is the Ideal Time for Tax Loss Harvesting …

While the markets have certainly rebounded very sharply this year, you may still have a couple investments in your portfolio that are both underwater and likely to remain dead weight going forward.

If that’s the case, now is a great time to consider booking the losses in preparation for your 2009 tax return … especially if you’ve also bagged some gains this year!

Let’s start with a quick refresher on tax loss harvesting.

If you stop looking for a job, you’re not considered unemployed in the official data .
A little planning now can really pay off come April!

When you sell a position at a loss, the IRS allows you to deduct that loss come tax day.

It works like this:

First, if you also booked gains for the year, you’ll be able to offset them on a dollar-for-dollar basis with no limit.

Second, if you recorded more losses than gains — or no gains at all — you can use your losses to offset some ordinary income. The maximum amount is $3,000 ($1,500 if married filing separately) … but you can carry additional losses forward for future tax years.

Doing this before January 1 makes great sense if you want to rid your portfolio of some losing positions. You can get the tax break and reinvest the remaining money into more attractive opportunities.

Of course, even if you have underwater positions that you would like to continue holding for the long-term, you still might consider selling them at a loss for the tax advantage.

Reason: As long as you wait more than 30 calendar days before buying back those same positions, the loss will count on your tax form.

The IRS applies what is known as a “wash rule,” under which they will not recognize a loss if you’ve bought replacement stock within 30 calendar days before or after you sell your losing position.

However, if you wait 31 days, you’re fine and the loss counts.

Now, the real risk is that the stock could soar while you’re on the sidelines. In that case, you’d miss out on the gains. However, after such a strong run lately, I wouldn’t expect another spectacular surge over the next month or two.

Obviously, commissions are another factor. But if you’re talking about one or two positions — and using a discount broker — the tax writeoff will more than make up for the rather trivial costs.

So as the year winds down, take a good look at your portfolio and consider booking some losses.

Three More Year-End Steps to Consider …

In addition to tax loss harvesting, the end of the year is a great time to consider other measures that can have a big impact on your finances.

Here are three:

First, establish a budget, or review and update your existing one.

For example, around the end of the year, my wife and I will sit down and go over our expenditures during the past year, and set guidelines for our spending in 2010. While it won’t be the most exciting night of our lives, it may very well be one of the most important to our long-term happiness.

Second, review your overall investment portfolio to make sure it matches your goals and risk tolerance.

Again, given the recent runup in many asset prices, you will certainly want to take a little while to review whether or not your asset allocation still matches your original plan. And given the turbulence over the last few years, you might also decide that a complete overhaul of your portfolio is necessary for a sound night’s sleep.

Third, start thinking about new financial twists that the new year will bring!

For example, one strategy that I have advocated in the past is converting a traditional IRA to a Roth. I won’t repeat the benefits of doing so here.

But I would like to remind you that, beginning next year, anyone will be able to do this conversion — regardless of their annual income. Better yet, if you effect this change in 2010, you will be able to break up the income over two years for income tax purposes.

Bottom line: While I don’t think you should spend the holiday season obsessing over nickels and dimes, I do think it makes sense to take a little time to think about where your finances are coming from and where you want them to go in 2010.

You might even find that having a few days off from work, and having your family members all gathered in one place, makes the holiday season an ideal time for a quick discussion on topics that can really make a huge difference in your wealth and prosperity for years to come.

Best wishes,

Nilus

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules