Meet Tax-Loss Harvesting.

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.

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.

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.

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.

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.

You can access the tax benefits of direct indexing with as little as $20,000 with S&P 500 Direct (with a management fee of 0.09%). You can also enjoy direct indexing in a diversified Automated Investing Account with a minimum account balance of $100,000 (with a 0.25% management fee). Direct indexing in our Automated Investing Account includes additional indices beyond the S&P 500® and completion ETFs.

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.

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.

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 Wealthfront accounts, including those from Tax-Loss Harvesting.