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  • Vanguard taxable account - TLH

    My Vanguard Total Stock Market taxable account says I lost – $1,746.89 since I opened it in January (put in 45K, its now around 43K).

    Can I do TLH to save the $1,746.89 on taxes now? If so, can someone point me in the right directions of the steps?

    PS - I just put 10K into the same account, which is pending.

    Thanks!

  • #2
    Also, what would be an appropriate replacement for my VTIAX?

    Comment


    • #3
      some light reading:

      https://www.bogleheads.org/wiki/Tax_loss_harvesting

      https://www.bogleheads.org/forum/viewtopic.php?t=172568

       

      you can use the sp500 fund VFIAX

      Comment


      • #4




        My Vanguard Total Stock Market taxable account says I lost – $1,746.89 since I opened it in January (put in 45K, its now around 43K).

        Can I do TLH to save the $1,746.89 on taxes now? If so, can someone point me in the right directions of the steps?

        PS – I just put 10K into the same account, which is pending.

        Thanks!
        Click to expand...


        No. That's $1746.89 in deductions, not tax credits. In my opinion, not worth the effort in this situation given the risks for minimal reward unless you're doing it for the experience.

        Generally, tax lost harvesting makes much more sense for non-index fund holdings. Index funds are already pretty tax efficient and tax loss harvesting is kind of built into them already.

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        • #5


          No. That’s $1746.89 in deductions, not tax credits. In my opinion, not worth the effort in this situation given the risks for minimal reward unless you’re doing it for the experience. Generally, tax lost harvesting makes much more sense for non-index fund holdings. Index funds are already pretty tax efficient and tax loss harvesting is kind of built into them already.
          Click to expand...


          Depending on his tax bracket, saving $900 in taxes for a few minutes hassle sounds like a fair deal to me..

          Comment


          • #6







            No. That’s $1746.89 in deductions, not tax credits. In my opinion, not worth the effort in this situation given the risks for minimal reward unless you’re doing it for the experience. Generally, tax lost harvesting makes much more sense for non-index fund holdings. Index funds are already pretty tax efficient and tax loss harvesting is kind of built into them already.
            Click to expand…


            Depending on his tax bracket, saving $900 in taxes for a few minutes hassle sounds like a fair deal to me..
            Click to expand...


            And staying out of the index fund for 31 days? That's a sizeable risk and effort for $900 on a $43k investment. And don't forget the decrease in cost basis for the new securities. In my opinion, not worth it. To each is own I suppose. Would make much more sense for diversified individual holdings.

            Comment


            • #7
              I don’t think switching between total stock market index and the 500 index is any kind of risk at all. Note that it is best if you are set up with specific ID rather than average cost for basis determination if you are going to TLH. I would TLH for that amount.

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              • #8
                Good point, I may be overstating the risk.

                Comment


                • #9


                  And staying out of the index fund for 31 days?
                  Click to expand...


                  You swap it to S&P as noted above.  Or you could approximate TSM with S&P fund and extended market, which would be exactly like the TSM fund.

                  https://www.bogleheads.org/wiki/Approximating_total_stock_market

                   

                  Comment


                  • #10




                    My Vanguard Total Stock Market taxable account says I lost – $1,746.89 since I opened it in January (put in 45K, its now around 43K).

                    Can I do TLH to save the $1,746.89 on taxes now? If so, can someone point me in the right directions of the steps?

                    PS – I just put 10K into the same account, which is pending.

                    Thanks!
                    Click to expand...


                    Just to make sure, did you only do one single deposit in January?  If you did multiple deposits within the lookback period, you can't TLH until you're outside of the lookback period for all of the purchases.  Lame rule.  Prevents me from TLHing on my January deposits, which is quite annoying.

                    Comment


                    • #11
                      Make sure you have held the shares for greater than 30 days to avoid “wash sale” disqualification.

                      Comment


                      • #12




                        Make sure you have held the shares for greater than 30 days to avoid “wash sale” disqualification.
                        Click to expand...


                        You don't need to have held the actual shares you are harvesting for 30 days--you just need to make sure you don't have any other shares that you've purchased within the 30-day period.  Shares can't have a wash sale with themselves.

                        Comment


                        • #13
                          You need to read about tax harvesting partners. Vtsax and s&p 500.  Vtiax and vfwax.  If you have a meaningful loss you sell it get the deduction and buy the partner so you are never really out of the market.  Use individual share ID.  You keep the diversification but get the deduction.

                          Comment


                          • #14
                            Also make sure you haven't had any purchases of the same stock in your retirement accounts within the look-back period (and that you don't within the look-forward period).  That's a gigantic and miserable trap waiting to catch people.

                            Comment


                            • #15
                              I was all excited to do my first TLH yesterday and then realized it was only $400 of "losses"

                              I feel like that is not worth the hassle of turning off dividend reinvesting, turning it back on eventually, calling Vanguard to figure out how the heck to pick certain lots of stock to sell, remembering to change funds after 30 days, etc.

                              But thanks for the links for some light reading, hopefully I will be ready when the big one hits.  Or never? That would also work.

                              Comment

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