Tax loss selling is an important part of everyone’s year-end financial planning and it should not be overlooked. Tax loss selling is the practice of selling assets at a loss to reduce your tax burden. It is particularly useful right now as the stock market remains volatile and many investors are looking for ways to lessen the impact of market losses on their portfolios.
The key to successful tax loss selling is timing. If you want to take advantage of this strategy, it is important to know the appropriate time to sell your assets. There are certain dates that the IRS recognizes as important deadlines for tax loss selling, so it is important to mark these on your calendar and plan accordingly.
The most important date to keep track of is December 31st. This is the final day of the fiscal year, meaning it is the last day you can sell assets with a loss in order to be able to claim it on your taxes. It is also important to note that the loss can be used to offset capital gains from previous years, so it is important to review your prior investment activity to understand how much of a loss you can claim.
Another important date is December 24th. This date is important because if you sell your asset on or after this date, it will not be included in the current year but rather included in the following year’s taxes. This is beneficial for those assets that you might want to wait to sell until the following year.
It is also important to note the tax law change that could influence some of the strategies you may have been using up until now. The tax law change states that companies can now carry forward their net operating losses for five years instead of the previous two years time period. This means that if you had a net operating loss this year, you could carry that forward for up to five years.
These are all important dates to keep in mind when planning your year-end tax loss selling. It is important to research the various strategies available to you in order to maximize your tax burden savings. Marking these key dates on your calendar can help ensure that you do not overlook any of the important deadlines associated with tax loss selling.