Question 1

You had me at “boost.” When do I get the money?

Accepted Answer

You’ll have to wait for a bit of market volatility first — look for a notification from us that we harvested losses. The “boost” comes when you offset your taxable gains with said losses on your taxes and (very smartly) reinvest the savings to get them compounding over time.

Question 2

Do you do Tax-Loss Harvesting for the Stock Investing Account?

Accepted Answer

Nope. We only offer Tax-Loss Harvesting for the Automated Investing Account. When you hire us to manage your portfolio for you, we can buy and sell securities to harvest your losses, and help you earn more in the process.

Question 3

Tell me more about the tax deferrals thing.

Accepted Answer

Glad you asked. The good thing about Tax-Loss Harvesting is that it can help lower your taxes when you sell investments, or it can help lower the taxes on your ordinary income, up to $3,000. If you don’t use these losses you’ve harvested in any given year, you can defer that to the next year. Or the next.

Question 4

Do I need to worry about capital gains tax?

Accepted Answer

Actually, Tax-Loss Harvesting is especially valuable for investors who regularly recognize short-term capital gains. Harvested losses can be applied to offset both capital gains and up to $3,000 in ordinary income annually. And any losses that can’t be applied in a given tax year can be carried over to offset future income and capital gains.

Question 5

Is there a limit to how much loss I can harvest?

Accepted Answer

Great question. You can apply your harvested short-term losses to offset short-term gains or reduce your taxable ordinary income by up to $3,000 per year. And you can even carry forward your tax loss to future tax years, or offset your long-term gains. And you can keep using or deferring your harvested losses for tax breaks for future years.

Question 6

Do you guys offer direct indexing?

Accepted Answer

Yes! And not to brag, but we’re the only automated investing service that does. When your account reaches at least $100,000, we can automatically look for opportunities on the individual stock level — not just on the ETF level. When your balance hits $500,000 we offer Tax-Loss Harvesting for Smart Beta, at no additional cost.

Question 7

Wait, what kind of accounts does this work on?

Accepted Answer

Good question. Tax-Loss Harvesting is only relevant to taxable accounts. It doesn’t apply to tax-advantaged accounts like a 529, IRAs or 401(k)s, since gains and losses in those types of accounts are not taxable events.

Question 8

What about wash sales? And what’s a wash sale?

Accepted Answer

Sounds more fun than it is, honestly. The IRS defines a wash sale as buying back a stock you've sold (or one that is "substantially identical") within 30 days. When we harvest a loss, we purchase an ETF that tracks a different index, but is highly correlated with the ETF we sold, to keep your portfolio more or less the same. We can buy the original ETF back after 31 days, if it shows renewed potential.

Question 9

I’m sold. How soon can this start happening?

Accepted Answer

We’re ready when you are. And our robots are too. When you open and fund your account, our software immediately starts looking for TLH opportunities daily. At the end of the year, we’ll send you a Form 1099 to be filed with your tax return that includes the relevant investment transactions in your Prime Insight Market accounts, including those from Tax-Loss Harvesting.

A lil’ extra on top of your returns?

Meet Tax-Loss Harvesting.

Our secret recipe? Homemade automation.

Part 1:

We identify the loss

Part 2:

We harvest the loss

Part 3:

We help lower your taxes

Taxes are annoying. Let’s break it down.