Tax Loss Harvesting Questions

[Buck]

Hey all,

I'm sorry to ask about this as I know it has been a hot topic, but this is my first real TLH opportunity (taxable account only been open for a year). While I have a 3 fund portfolio, its about 70% Vanguard total stock market, 29.5% Vanguard total international stock market, 0.5% Vanguard total bond. Maybe a little aggressive, but I'm young and have a long investing time ahead of me. This makes it a little difficult to TLH, as my taxable, solo 401k, and Roth IRA accounts all hold VTSAX and VXUS. I invest monthly in taxable on the 15th of each month. On 1/6/22, I invested in the Roth IRA. On about 12/23/21, I finished up 2021's solo401k contributions.

Essentially my question is: In order to avoid any "wash sale" rules between different accounts, should I just wait until 2/7/22 to capture any losses (if there are any still)? And make sure that I change my recurring monthly investment in the taxable account to the TLH "partners" (like S&P500 and All-world ex-US) for at least the month?

I've read articles from both PoF and WCI regarding this topic, and I just wanted to make sure my thinking was correct.

Thanks in advance!

[Larry Ragman]

Wash sale rules apply 30 days prior to 30 days after. If I were you I would pick a different TLH partner altogether, perhaps a S&P 500 fund?

[CordMcNally]

Just make sure you sell any purchased shares in the last 30 days of whatever you're trying to TLH. I would personally hold off on any planned contributions for the next 30 days and then just put them in the original funds after that.

[zlandar]

I would avoid having the same ETF or mutual fund in your tax deferred accounts so you don’t have to deal with this whenever you want to TLH. I use a target date and the VG world index fund in my tax deferred accounts.

Typically don’t want to hold non-muni bonds in your brokerage.

[Buck]

Wash sale rules apply 30 days prior to 30 days after. If I were you I would pick a different TLH partner altogether, perhaps a S&P 500 fund?

Thank you for the reply. I plan to use an S&P 500 fund for total stock market partner, and use maybe world ex-us fund for total international partner.

[Buck]

Just make sure you sell any purchased shares in the last 30 days of whatever you're trying to TLH. I would personally hold off on any planned contributions for the next 30 days and then just put them in the original funds after that.

That makes sense and seems (hopefully) easy enough to not mess up. I guess my main problem is in the 30 days prior to the TLH, where I've bought the same funds in multiple accounts. And selling those in all the other accounts as well (the Roth IRA and solo401k) seems like it could make some messy accounts. Although I'm sure it's not really as messy as I think it would be. This could be avoided in the future if decided to get away from the 2-3 fund portfolio and maybe invest in a REIT fund in maybe my Roth IRA so that it isn't that large of holding in my overall portfolio.

As you can tell, there's lots of "maybes" above! Some degree of analysis paralysis I guess.

[CordMcNally]

That makes sense and seems (hopefully) easy enough to not mess up. I guess my main problem is in the 30 days prior to the TLH, where I've bought the same funds in multiple accounts. And selling those in all the other accounts as well (the Roth IRA and solo401k) seems like it could make some messy accounts. Although I'm sure it's not really as messy as I think it would be. This could be avoided in the future if decided to get away from the 2-3 fund portfolio and maybe invest in a REIT fund in maybe my Roth IRA so that it isn't that large of holding in my overall portfolio.

As you can tell, there's lots of "maybes" above! Some degree of analysis paralysis I guess.

The IRS doesn't specifically mention 401k accounts so you don't have to worry about your solo 401k. As for your Roth, you can make all the transactions you want without tax consequences so just put the money back into the original fund after the wash sale period.

[jellowars]

Got a couple TLH questions too:

1) Is simply tracking a different market index enough to make two funds "substantially different"? I'm looking into exchanging my FTIHX (tracks MSCI ACWE ex-US) with FZILX (Fidelity's zero international fund that tracks some proprietary Fidelity index)

2) Who keeps tracks of your accumulated losses over the years? Is this something I keep track of on my own (on a spreadsheet or something) and then apply it when I'm doing my taxes? Or does Fidelity track this internally and automatically apply it when I generate capital gains in the future?

Thanks!

[Bmac]

This is also where using a target date fund in tax-deferred accounts can be helpful. At least it eliminates the issue with wash sales across accounts and no concern with capital gain distributions, etc.

[HM7]

Question on the Wash Sale rule.

Do individual SpecID Lots count towards the Wash Sale Rule?

Let's say you use your lots with negative capital gains to offset the lots with positive capital gains. And you end up with an overall slightly positive capital gain.
If you buy a similar security within 30 days, will you your negative lots be subject tot the Wash sale rule?
Your overall capital gain (sum of all the individual lots) will be positive; but you have some negative lots in there as a part of the overall sale.

I've been wanting to migrate my TIPS from taxable to tax advantaged accounts (since dividends are ordinary dividends).
I have the VIPSX (Vanguard intermediate TIPS). I thought about using the TLH partner SCHP (Schwab TIP) but I can't tell if the are substantially not similar. It seems harder to tell with TIPs.

[CordMcNally]

Got a couple TLH questions too:

1) Is simply tracking a different market index enough to make two funds "substantially different"? I'm looking into exchanging my FTIHX (tracks MSCI ACWE ex-US) with FZILX (Fidelity's zero international fund that tracks some proprietary Fidelity index)

2) Who keeps tracks of your accumulated losses over the years? Is this something I keep track of on my own (on a spreadsheet or something) and then apply it when I'm doing my taxes? Or does Fidelity track this internally and automatically apply it when I generate capital gains in the future?

Thanks!

1.) Tracking different indexes counts as substantially different.

2.) Fidelity doesn't know anything about your taxes. They just report sales, gains, losses, etc. If you're using a tax program then they'll keep track of your carryover. It's always a good idea to keep your own tab, though.

[CordMcNally]

Question on the Wash Sale rule.

Do individual SpecID Lots count towards the Wash Sale Rule?

Let's say you use your lots with negative capital gains to offset the lots with positive capital gains. And you end up with an overall slightly positive capital gain.
If you buy a similar security within 30 days, will you your negative lots be subject tot the Wash sale rule?
Your overall capital gain (sum of all the individual lots) will be positive; but you have some negative lots in there as a part of the overall sale.

I've been wanting to migrate my TIPS from taxable to tax advantaged accounts (since dividends are ordinary dividends).
I have the VIPSX (Vanguard intermediate TIPS). I thought about using the TLH partner SCHP (Schwab TIP) but I can't tell if the are substantially not similar. It seems harder to tell with TIPs.

Wash sale rules don't change. You can't buy the same security within 30 days or it'll be a wash sale.

[endo4jc]

Bumping this thread with a tax loss harvest question.

My spouse and I have two brokerage accounts titled/owned by our revocable living trust, which we are the the grantors/beneficiaries. As of today I have around $3,000 in losses, expect that to increase today. In early February 2022, I purchased VTIAX in my solo 401(k) and VTSAX in our HSA.

For example, assume I sold my securities (VTI in one brokerage account; VXUS and SWTSX - Schwab Total Market - in the other brokerage account) for a loss today, and bought an appropriate TLH partner… is this considered a wash sale since I purchased essentially the same (a total market MF and a total international market MF) security within 30 days prior to selling a total market MF and ETF and a total international market ETF?

I understand it’s not a wash sale if I buy a large cap fund or something different. Just not sure about the prior 30 days and how an HSA relates.

[BryanMD]

Are wash sale rules specific to the individual? Do couples that are married filing jointly need to worry about wash sales between their separate accounts? Example: I TLH shares of VTI, but 5 days prior my wife bought VTI in her Roth account, would this be a wash?

[childay]

Bumping this thread with a tax loss harvest question.

My spouse and I have two brokerage accounts titled/owned by our revocable living trust, which we are the the grantors/beneficiaries. As of today I have around $3,000 in losses, expect that to increase today. In early February 2022, I purchased VTIAX in my solo 401(k) and VTSAX in our HSA.

For example, assume I sold my securities (VTI in one brokerage account; VXUS and SWTSX - Schwab Total Market - in the other brokerage account) for a loss today, and bought an appropriate TLH partner… is this considered a wash sale since I purchased essentially the same (a total market MF and a total international market MF) security within 30 days prior to selling a total market MF and ETF and a total international market ETF?

I understand it’s not a wash sale if I buy a large cap fund or something different. Just not sure about the prior 30 days and how an HSA relates.

Well it would be a wash sale for the early february purchase yes if that was in IRA or taxable, but whether wash sale rule applies to HSA is up in the air still.
You could also sell your lots in the HSA and swap those also.