07 May How to Turn on Tax Loss Harvesting Tool
How to Turn on Tax Loss Harvesting Tool at My Robo Adviser™
Tax Loss Harvesting (TLH) can help improve the annual returns in a taxable account by automating an advanced tax-saving strategy. When investments lose value, they can be sold to help offset the taxes that come with income and capital gains. You can offset up to $3,000 of your ordinary income each year with tax losses. Tax Loss Harvesting is designed to:
- Reduce your highly taxed ordinary income by up to $3,000 per year
- Increase after-tax returns in a taxable account
- Coordinate harvests across your household’s accounts with us, including IRAs, 401(k), joint accounts and trusts
- Make doing your taxes easier by consolidating end-of-year tax reporting
Tax Loss Harvesting is only applicable to taxable accounts and cannot be applied to IRA accounts.
How does Tax Loss Harvesting Work?
At the most basic level, tax loss harvesting is selling a security that has experienced a loss- and then buying a correlated asset (i.e. one that provides similar exposure) to replace it. The strategy has two benefits: it allows the investor to “harvest” a loss, and it helps keep the portfolio balanced at the desired allocation. Harvesting tax losses has several potential benefits, including offsetting unavoidable gains elsewhere in your portfolio, push capital gains from short to long-term which are then taxed at a lower tax rate, or to offset ordinary income up to $3,000 from higher marginal rates.
How to Turn On Tax Loss Harvesting for Your My Robo Adviser™ Account
Log in to your MyRoboAdviser.com account. On the Summary page, look to the right for the “Tax Losses Harvested” section located under the top title bar on the right side of the page. Click on “Set Up” to access the Tax Loss Harvesting+ page (Note: if you see “Manage” then you have already set up TLH+, but you may continue through to be sure your tax status and income level remain current). Click on the blue “See if its right for you” tab in the lower right. Confirm your financial profile including your Tax filing status and Income information. The system estimates your tax bracket, which you can change if you believe the estimate is not accurate. Then click “Continue”. You will then be provided with a recommendation if TLH is beneficial for you (its typically not beneficial for individuals in lower tax brackets). If you are in a lower tax bracket and do not want to turn on TLH, select Click “OK, got it”. Click “Continue” if you want to enable TLH. Investors in a higher tax bracket will be directed to a slightly different page where you can select “Enable TLH+” to turn on TLH. You can always turn off TLH in the future.
If you have any questions about whether tax loss harvesting is right for you, you can contact us directly at 920.785.6012 or email us at firstname.lastname@example.org. For more information on site navigation or turning on Tax Loss Harvesting, Betterment for Advisors maintains a support line you can call at 800.400.1571.
Last updated May 8, 2018
Disclosures: For informational purposes only. MyRoboAdviser.com provides investment recommendations based on a goals-based platform. Investments are not guaranteed, not bank insured, and may lose money. Investment Advisory Services provided to clients of MyRoboAdviser by ETF Model Solutions, LLC, an SEC registered investment Adviser (registration does not imply any particular skill or training). Sub advisory services provided to clients of MyRoboAdviser by Betterment, LLC, an SEC registered investment advisor. Brokerage services provided to clients of MyRoboAdviser by Betterment Securities, an SEC registered broker-dealer and member FINRA/SIPC. Certain content on the Betterment, LLC website, including projected returns, may not apply to MyRoboAdviser.com’s investment recommendations. Clients must agree to provide and maintain accurate and current information with respect to their goals and financial circumstances. MyRoboAdviser.com does not provide financial planning or tax advice.