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Retirement Answer Man
Retirement Year End Planning: Tax-Loss Harvesting
Nov 6, 2024
In this discussion, tax expert Erin Coe shares invaluable insights on tax-loss harvesting, a strategy for selling underperforming assets to reduce tax burdens. She breaks down the wash-sale rule and offers practical tips on navigating tax software and regulations. Topics like Roth conversions and potential pitfalls in financial planning are also addressed. Listeners gain a better grasp of optimizing year-end financial strategies to improve their retirement outcomes.
48:56
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Quick takeaways
- Tax-loss harvesting can significantly reduce tax liabilities by selling capital assets at a loss to offset gains and carry forward unused losses.
- Understanding the wash-sale rule is essential for effective tax-loss harvesting, as it prevents the immediate repurchase of sold assets within 30 days to maintain loss eligibility.
Deep dives
Year-End Financial Optimization Strategies
The discussion highlights the significance of year-end financial optimization, particularly in the context of tax-loss harvesting. Tax-loss harvesting involves selling capital assets at a loss to offset other capital gains, thereby reducing tax liabilities. For instance, if an investor sells a bond fund at a loss of $10,000, this loss can neutralize capital gains accrued during the year, potentially minimizing overall tax exposure. Furthermore, unused losses can be carried forward to subsequent years, up to $3,000 per year against ordinary income, offering strategic opportunities for tax management.
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Discover
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