As we end the year 2021 and start into 2022, everyone is thinking about their taxes and the specific nuances that each individual or household deals with in the first quarter of each year. It benefits individuals who have investment accounts (specifically taxable accounts like brokerage accounts) to look at the overall, yearly performance of each investment in their portfolio. There is a process called tax loss harvesting that allows individuals to sell out of positions that have losses in a given year and use those losses to offset capital gains or income. When the capital losses exceed the capital gains, the excess losses can be used to offset up to $3,000 in income in a given year. It is essential that individuals consult with their financial advisor and/or tax professional to determine if there is a benefit that can be obtained from this process.
The specifics of this program can be found in the IRS code and the link that follows: https://www.irs.gov/taxtopics/tc409. There are numerous financial sites available to provide more information and clarity on this topic as well. Individuals must be fully aware of all the implications of tax loss harvesting before engaging in transactions that may or may not qualify under the IRS guidance and to their specific financial situation. Coordination between the accountant and financial professional (unless an individual is doing their own investing) is essential in determining the best use of potential losses and the timing in which they are utilized. Seraphim Wealth Advisors assists clients in the evaluation of their portfolios to determine if there is a benefit to using the tax loss harvesting methodology.
Please feel free to contact Eric Wimbush at ewimbush@seraphimwealth.com, 404-381-2272 (office) or 404-271-0067 (cell) with any inquiries.