How to automate tax loss harvesting (2024)

Tax loss harvesting is a well-known tax planning strategy that investors use to reduce their current US federal taxable income. By selling an investment at a loss, it can help you counterbalance the tax hit of any capital gains you’ve earned. Any investment in a taxable account is eligible for tax loss harvesting, including stocks, bonds, mutual funds, and ETFs.

This offsetting isn’t restricted to gains and losses from the same year. If you don’t have any current gains to offset, you can carry over capital losses across multiple years to offset future gains. You can also use tax losses to potentially offset both short-term and long-term gains

Core Portfolios is a robo-advisor that combines Morgan Stanley’s team of professionals with automated technology to manage your day-to-day investing. Investors who use Core Portfolios can now take advantage of tax loss harvesting with no additional effort on their part.

Turning on tax loss harvesting with Core Portfolios allows you to automatically harvest tax losses as the robo-advisor rebalances your portfolio. By strategically selling securities at a loss, Core Portfolios can help you reduce the taxable income that gets created by any gains the robo-advisor generates through its trading actions. When making a sale to generate a tax loss, Core Portfolios will look to purchase a replacement security in the same investment asset class to ensure you keep your target exposure.¹

Unlike many other investment firmsthat use a robo-advisor, Core Portfolios allows investors to take advantage of tax loss harvesting starting with a minimum investment of $500 at no additional cost. It will also harvest tax losses even when it sells a fraction of a share.

Keep in mind that tax loss harvesting is only available for taxable Core Portfolio accounts, such as a brokerage account, and cannot be used for retirement accounts such as an IRA.

Here’s how to turn it on for your account:

1. To get started, you must have a taxable Core Portfolios account. Not yet a Core Portfolios customer? Sign up for a Core Portfolios account now.
2. Once you log in, find the Tax Loss Harvesting section of the header andclick ‘Enroll.’
3. A popup will then confirm that you wish to activate the feature; click‘Yes, Enroll’ to continue.
4. Once you click ‘Yes,' Enroll,’ the popup will close. Your status in the Tax LossHarvesting section of the header will now say ‘’Enrolled.’ If you wish to turnthe feature off at any time, simply click the ‘Unenroll’ link in the header

Smart tax planning can help you save more for retirement and keep more of what you’ve already saved. Consider these tax-efficient retirement planning strategies.

Individual Retirement Accounts or IRAs are tax-deferred vehicles that can generally accept a rollover of assets from a qualified retirement plan. Here are some things you should consider ahead of rolling over your retirement savings.