'Harvesting' Can Offset a Gain
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Taxpayers should consider selling money-losing investments to produce losses that can offset gains on other investments. Financial planners call this harvesting and say anyone can advantage of it, even those with small investment portfolios.
But there are caveats: Don't do what planners call a "wash" transaction, which could prevent the use of the loss as an offset. A wash is buying the same or essentially similar stock, mutual fund or other asset within 30 days before or after selling the identical item to generate a loss.
Investors also must consider if the potential long-term value of what they are selling is worth more than the taxes saved by selling it to generate a loss now.
Taxpayers should also consider bundling expenses from several years on items such as medical costs or investment losses. If last year's costs weren't high enough to allow you to itemize them as deductions, they might reach for this tax season if added to this year's costs.
