00:00 Speaker A

It’s been a volatile year in the markets. Some trades worked, others maybe not so much.

00:06 Speaker A

Now’s a good time to see if you can use those losses to your advantage at tax time.

00:11 Speaker A

It’s called tax loss harvesting, and here’s how it works.

00:15 Speaker A

Say you bought 1,000 shares at $50 and sold at $60.

00:20 Speaker A

That’s a $10,000 capital gain.

00:22 Speaker A

Then another investment, well, it dropped.

00:26 Speaker A

You bought 1,000 shares at $50 and the stock price fell to $37.

00:31 Speaker A

If you sell, you can lock in a $13,000 capital loss.

00:35 Speaker A

You could use that loss to offset your gain dollar for dollar.

00:39 Speaker A

So a $13,000 loss cancels out a $10,000 gain, meaning no capital gains tax.

00:46 Speaker A

And you can carry leftover losses forward, plus deduct up to $3,000 a year against income.

00:52 Speaker A

But watch the wash sale rule.

00:55 Speaker A

If you sell a stock for a loss and buy the same or, quote unquote, substantially identical one within 30 days, you can’t claim that same loss.

01:03 Speaker A

Now, Fidelity says one work around is switching from an individual stock to an ETF or a mutual fund in the same industry.

01:10 Speaker A

But cryptocurrency, well, that’s different.

01:13 Speaker A

Crypto doesn’t have the wash sale restrictions.

01:16 Speaker A

You could sell at a loss and buy back immediately.

01:19 Speaker A

But don’t wait to harvest losses this year.

01:22 Speaker A

Traders must settle before the final market close, that’s at 4:00 p.m. Eastern on December 31st.

00:00 Speaker A

It’s been a volatile year in the markets. Some trades worked, others maybe not so much.

00:06 Speaker A

Now’s a good time to see if you can use those losses to your advantage at tax time.

00:11 Speaker A

It’s called tax loss harvesting, and here’s how it works.

00:15 Speaker A

Say you bought 1,000 shares at $50 and sold at $60.

00:20 Speaker A

That’s a $10,000 capital gain.

00:22 Speaker A

Then another investment, well, it dropped.

00:26 Speaker A

You bought 1,000 shares at $50 and the stock price fell to $37.

00:31 Speaker A

If you sell, you can lock in a $13,000 capital loss.

00:35 Speaker A

You could use that loss to offset your gain dollar for dollar.

00:39 Speaker A

So a $13,000 loss cancels out a $10,000 gain, meaning no capital gains tax.

00:46 Speaker A

And you can carry leftover losses forward, plus deduct up to $3,000 a year against income.

00:52 Speaker A

But watch the wash sale rule.

00:55 Speaker A

If you sell a stock for a loss and buy the same or, quote unquote, substantially identical one within 30 days, you can’t claim that same loss.

01:03 Speaker A

Now, Fidelity says one work around is switching from an individual stock to an ETF or a mutual fund in the same industry.

01:10 Speaker A

But cryptocurrency, well, that’s different.

01:13 Speaker A

Crypto doesn’t have the wash sale restrictions.

01:16 Speaker A

You could sell at a loss and buy back immediately.

01:19 Speaker A

But don’t wait to harvest losses this year.

01:22 Speaker A

Traders must settle before the final market close, that’s at 4:00 p.m. Eastern on December 31st.