Yes. In your annual tax forms, in the 1099-B (Vanguard issues a consolidated 1099 and it will be a section in there), it'll list your loss amounts (and gains if you have any).mikejuss wrote: ↑Mon Apr 26, 2021 5:14 pmHow do that taxes work on this? Does, say, Vanguard issue a document stating the loss after you sell the stock?JustinR wrote: ↑Mon Apr 26, 2021 4:53 pmEdit: Sorry, I didn't read the context of your post.
March of last year - You could've harvested several years worth of losses in large downturns like that.
That's really the key...it's way more efficient if you can harvest several years worth at once.
You can deduct $3k a year, so if you have losses of $9k then you're set for this year plus the next two years. At a ~30% tax rate, that's $3,000 after-tax cash for executing a single trade.
Then, you just need another downturn to happen in the next four years to do another one. That's pretty likely to happen.
This way you get the most bang for your buck with minimal work. Not that it's much work at all. In any case, the small amount of work it is to figure everything out and execute the trade is worth a few thousand extra bucks in your pocket.
You just plug that into your tax software, and the software will correctly deduct $3,000 for this year, and (at least for my software) figure out the overflow for next year in the "Capital Loss Carryover Worksheet."
If you use the same software next year, it might import this carryover automatically to deduct $3,000 for next year. Or you might have to manually input the correct carryover loss amount. But in the end it's up to you to make sure it's kept track of.