I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

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Linkin06
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I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Linkin06 »

I own VXUS and have been sad to see our decline lately. I sold 90k worth of VXUS for loss and was happy to buy in IXUS. But now I was learning that dividends could trigger wash sale, so I tried to set up VXUS to not reinvest dividend. I cannot select the check box to change it, and when I called in to Vanguard, they said some funds can't be set to not reinvest dividend, and VXUS is one. So now I think June will be a dividend soon based on last year's dividend, am I screwed then with a wash sale?
bagastuff
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by bagastuff »

You'll just have to sell the shares you got from the reinvestment.
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retired@50
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by retired@50 »

At most, it sounds like it will potentially be a partial wash sale.

Wash sales are determined by number of replacement shares purchased, so if the dividend buys 10 shares, but you sold 100 shares, then you'd still get the capital loss on 90 shares.

More details here: https://www.bogleheads.org/wiki/Wash_sale

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muffins14
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by muffins14 »

I find it hard to believe that you can’t set VXUS to not reinvest dividends. If that’s the case, it’s a reason to move to literally any other brokerage.

You can also just go ahead and sell those newly-acquired shares too.

in any case, there may be a bit of a wash if the dividend occurs within 30 days of your sale, but likely it won’t wipe out your whole harvesting attempt.
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brawlrats
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by brawlrats »

muffins14 wrote: Wed May 25, 2022 12:56 pm I find it hard to believe that you can’t set VXUS to not reinvest dividends. If that’s the case, it’s a reason to move to literally any other brokerage.
I agree...I have VXUS in my son's inherited IRA and it is set to transfer to the settlement fund.
dbr
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by dbr »

Linkin06 wrote: Wed May 25, 2022 12:49 pm I own VXUS and have been sad to see our decline lately. I sold 90k worth of VXUS for loss and was happy to buy in IXUS. But now I was learning that dividends could trigger wash sale, so I tried to set up VXUS to not reinvest dividend. I cannot select the check box to change it, and when I called in to Vanguard, they said some funds can't be set to not reinvest dividend, and VXUS is one. So now I think June will be a dividend soon based on last year's dividend, am I screwed then with a wash sale?
I hold some VXUS at Fidelity and do not reinvest the dividend. In fact it is deposited directly into my checking account. This makes no sense.
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Linkin06
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Linkin06 »

I spoke to two representatives and both said it. No idea...I can't check the box to make the change. Maybe I'll try again another day...
Nathan Drake
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Nathan Drake »

Linkin06 wrote: Wed May 25, 2022 1:02 pm I spoke to two representatives and both said it. No idea...I can't check the box to make the change. Maybe I'll try again another day...
I think the fund VXUS isn’t the limitation, but a setting on a certain account
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
student
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by student »

bagastuff wrote: Wed May 25, 2022 12:55 pm You'll just have to sell the shares you got from the reinvestment.
This is one of the easiest way to fix it.
Last edited by student on Wed May 25, 2022 1:05 pm, edited 1 time in total.
H-Town
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by H-Town »

Linkin06 wrote: Wed May 25, 2022 12:49 pm I own VXUS and have been sad to see our decline lately. I sold 90k worth of VXUS for loss and was happy to buy in IXUS. But now I was learning that dividends could trigger wash sale, so I tried to set up VXUS to not reinvest dividend. I cannot select the check box to change it, and when I called in to Vanguard, they said some funds can't be set to not reinvest dividend, and VXUS is one. So now I think June will be a dividend soon based on last year's dividend, am I screwed then with a wash sale?
Umm, correct me if I'm wrong, but didn't you sold all the VXUS shares? If you don't have any VXUS shares left, it makes sense that you can't select reinvest dividend preference for VXUS. And if you don't have any VXUS shares left, you won't get any dividends from those shares.

You don't need to call Vanguard. Just go to the website - Profile & Account Settings. Select Holding level dividend and capital gain elections. Select Change election, and you can choose the option "transfer to settlement fund".
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student
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by student »

H-Town wrote: Wed May 25, 2022 1:05 pm
Linkin06 wrote: Wed May 25, 2022 12:49 pm I own VXUS and have been sad to see our decline lately. I sold 90k worth of VXUS for loss and was happy to buy in IXUS. But now I was learning that dividends could trigger wash sale, so I tried to set up VXUS to not reinvest dividend. I cannot select the check box to change it, and when I called in to Vanguard, they said some funds can't be set to not reinvest dividend, and VXUS is one. So now I think June will be a dividend soon based on last year's dividend, am I screwed then with a wash sale?
Umm, correct me if I'm wrong, but didn't you sold all the VXUS shares? If you don't have any VXUS shares left, it makes sense that you can't select reinvest dividend preference for VXUS. And if you don't have any VXUS shares left, you won't get any dividends from those shares.

You don't need to call Vanguard. Just go to the website - Profile & Account Settings. Select Holding level dividend and capital gain elections. Select Change election, and you can choose the option "transfer to settlement fund".
My understanding is the OP only sold some of them, presumably only those with a capital loss.
mega317
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by mega317 »

Those who dare to fail miserably...?

Sounds like you learned a lot and it was a good thing overall!
Morik
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Morik »

Linkin06 wrote: Wed May 25, 2022 1:02 pm I spoke to two representatives and both said it. No idea...I can't check the box to make the change. Maybe I'll try again another day...
I have had representatives confidently state incorrect things to me.
The most recent I can recall is when I called Vanguard to exchange mutual fund shares for the ETF equivalent in a no-tax-consequences transaction.
I somehow ended up at the wrong department and I explained what i wanted to do and the guy said you can't do that, I'd have to sell the MF shares and buy the ETF and take a tax hit on any gains. He did end up transferring me to the right department, but reiterated several times that the thing I was trying to do is not a thing and that there is no way to exchange MF to ETF shares without selling.
He was incorrect--I had done it before, and the person he transferred me to was able to do it again.

Anyway, the point is--just because a representative said it, doesn't mean its actually true.

I've never heard of not being able to turn off dividend reinvestment for an ETF. (Well, to be clear, I've never heard of not being able to turn off dividend reinvestment for anything...)
Is this a regular taxable brokerage account?
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goingup
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by goingup »

Try logging into your account and select Account Maintenance. On the old mutual fund platform (not brokerage account) that is where you make changes at the fund level. I recently had to do this with a bond fund.

The explanation you got from Vanguard makes no sense to me.
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Linkin06
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Linkin06 »

Ok so I selected all my shares of VXUS that have a loss right now and sold them, but should I not be doing this for purchases of VXUS in last 30 days? I then used the proceeds to get IXUS. I sold today.

i'm a little confused about the 30 days before. does that mean I couldn't sell any shares of VXUS i got within the last 30 days? should I try to uncheck them?

for whatever reason, when I'm in the section to select Dividends location, I cannot check VXUS to save a change.
H-Town
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by H-Town »

Linkin06 wrote: Wed May 25, 2022 2:14 pm Ok so I selected all my shares of VXUS that have a loss right now and sold them, but should I not be doing this for purchases of VXUS in last 30 days? I then used the proceeds to get IXUS. I sold today.

i'm a little confused about the 30 days before. does that mean I couldn't sell any shares of VXUS i got within the last 30 days? should I try to uncheck them?

for whatever reason, when I'm in the section to select Dividends location, I cannot check VXUS to save a change.
In the Dividends section, you need to click on "Change Elections" to go to the screen that allow you to select a dropdown menu.

As for your question about TLH, go to WIKI page and read this article first: https://www.bogleheads.org/wiki/Tax_loss_harvesting

Once you go through it a couple of times, if you are still unclear, feel free to ask questions.
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Linkin06
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Linkin06 »

"You can't change your dividend and capital gains elections on holdings that currently have unsettled trades. You must wait until the day after settlement in order to make election changes."

doh! duh...

but i do still have question. should i not be selling anything I got within 30 days of today too? or i just can't deduct those basically.
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by lazynovice »

Linkin06 wrote: Wed May 25, 2022 2:24 pm "You can't change your dividend and capital gains elections on holdings that currently have unsettled trades. You must wait until the day after settlement in order to make election changes."

doh! duh...

but i do still have question. should i not be selling anything I got within 30 days of today too? or i just can't deduct those basically.
There is no requirement to hold shares any length of time to tax loss harvest. If you do not sell everything you purchased in the last thirty days, those shares will be considered replacement shares and you will have a partial wash sale until you sell them. For a mutual fund, you might violate Vanguard’s frequent trading rules by trading so soon, but not for an ETF.
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by FactualFran »

Morik wrote: Wed May 25, 2022 1:59 pm I have had representatives confidently state incorrect things to me.
The most recent I can recall is when I called Vanguard to exchange mutual fund shares for the ETF equivalent in a no-tax-consequences transaction.
I somehow ended up at the wrong department and I explained what i wanted to do and the guy said you can't do that, I'd have to sell the MF shares and buy the ETF and take a tax hit on any gains. He did end up transferring me to the right department, but reiterated several times that the thing I was trying to do is not a thing and that there is no way to exchange MF to ETF shares without selling.
He was incorrect--I had done it before, and the person he transferred me to was able to do it again.
An exchange is a sequence of two steps: selling one fund and buying another. The word you likely should have used was "convert" rather than "exchange". Representatives usually will try to do what you said rather than what you may have meant.
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Morik »

FactualFran wrote: Wed May 25, 2022 2:36 pm
Morik wrote: Wed May 25, 2022 1:59 pm I have had representatives confidently state incorrect things to me.
The most recent I can recall is when I called Vanguard to exchange mutual fund shares for the ETF equivalent in a no-tax-consequences transaction.
I somehow ended up at the wrong department and I explained what i wanted to do and the guy said you can't do that, I'd have to sell the MF shares and buy the ETF and take a tax hit on any gains. He did end up transferring me to the right department, but reiterated several times that the thing I was trying to do is not a thing and that there is no way to exchange MF to ETF shares without selling.
He was incorrect--I had done it before, and the person he transferred me to was able to do it again.
An exchange is a sequence of two steps: selling one fund and buying another. The word you likely should have used was "convert" rather than "exchange". Representatives usually will try to do what you said rather than what you may have meant.
He seemed pretty specific that there is no method via which I could go from the state of 'I have $X worth of the mutual fund' to the state of 'I have $X worth of the ETF equivalent' without selling the mutual fund shares and realizing any capital gains/losses.
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Linkin06
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Linkin06 »

thank you all for the help lol. i definitely learned on my first go around but i think i get the rules more.
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by KyleAAA »

I just did this the other day at Vanguard for this same reason: to avoid a wash sale. Worked for me.
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Lee_WSP »

Linkin06 wrote: Wed May 25, 2022 2:24 pm but i do still have question. should i not be selling anything I got within 30 days of today too? or i just can't deduct those basically.
To avoid a wash sale, you must not purchase substantially identical shares within the 30 days before, the day of, or 30 days after (the 61 day period). Period.

So, don't buy anything substantially identical within the 61 days and you won't have a wash sale.

If you do make a purchase which results in a wash, well, you have a wash. Such is life & taxes. Don't try to wash the wash, you'll just make your life more complicated unless you plan to liquidate the entire position in that fund. In which case, ask before doing it and get a second opinion beforehand.
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by lazynovice »

Lee_WSP wrote: Wed May 25, 2022 3:17 pm
Linkin06 wrote: Wed May 25, 2022 2:24 pm but i do still have question. should i not be selling anything I got within 30 days of today too? or i just can't deduct those basically.
To avoid a wash sale, you must not purchase substantially identical shares within the 30 days before, the day of, or 30 days after (the 61 day period). Period.

So, don't buy anything substantially identical within the 61 days and you won't have a wash sale.

If you do make a purchase which results in a wash, well, you have a wash. Such is life & taxes. Don't try to wash the wash, you'll just make your life more complicated unless you plan to liquidate the entire position in that fund. In which case, ask before doing it and get a second opinion beforehand.
There is nothing complicated about selling all shares purchased in the previous 30 days. It’s a couple of clicks next to the lots with the dates you need to get rid of. If the dividend had been reinvested, there is nothing hard about selling those shares and washing the wash.
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Lee_WSP
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Lee_WSP »

lazynovice wrote: Wed May 25, 2022 3:49 pm
Lee_WSP wrote: Wed May 25, 2022 3:17 pm
Linkin06 wrote: Wed May 25, 2022 2:24 pm but i do still have question. should i not be selling anything I got within 30 days of today too? or i just can't deduct those basically.
To avoid a wash sale, you must not purchase substantially identical shares within the 30 days before, the day of, or 30 days after (the 61 day period). Period.

So, don't buy anything substantially identical within the 61 days and you won't have a wash sale.

If you do make a purchase which results in a wash, well, you have a wash. Such is life & taxes. Don't try to wash the wash, you'll just make your life more complicated unless you plan to liquidate the entire position in that fund. In which case, ask before doing it and get a second opinion beforehand.
There is nothing complicated about selling all shares purchased in the previous 30 days. It’s a couple of clicks next to the lots with the dates you need to get rid of. If the dividend had been reinvested, there is nothing hard about selling those shares and washing the wash.
That doesn't undo the wash sale, it just potentially makes it irrelevant by operation of section (d).
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by lazynovice »

Lee_WSP wrote: Wed May 25, 2022 4:20 pm
lazynovice wrote: Wed May 25, 2022 3:49 pm
Lee_WSP wrote: Wed May 25, 2022 3:17 pm
Linkin06 wrote: Wed May 25, 2022 2:24 pm but i do still have question. should i not be selling anything I got within 30 days of today too? or i just can't deduct those basically.
To avoid a wash sale, you must not purchase substantially identical shares within the 30 days before, the day of, or 30 days after (the 61 day period). Period.

So, don't buy anything substantially identical within the 61 days and you won't have a wash sale.

If you do make a purchase which results in a wash, well, you have a wash. Such is life & taxes. Don't try to wash the wash, you'll just make your life more complicated unless you plan to liquidate the entire position in that fund. In which case, ask before doing it and get a second opinion beforehand.
There is nothing complicated about selling all shares purchased in the previous 30 days. It’s a couple of clicks next to the lots with the dates you need to get rid of. If the dividend had been reinvested, there is nothing hard about selling those shares and washing the wash.
That doesn't undo the wash sale, it just potentially makes it irrelevant by operation of section (d).
A distinction without a difference.
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Lee_WSP
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Lee_WSP »

lazynovice wrote: Wed May 25, 2022 6:21 pm
Lee_WSP wrote: Wed May 25, 2022 4:20 pm
lazynovice wrote: Wed May 25, 2022 3:49 pm
Lee_WSP wrote: Wed May 25, 2022 3:17 pm
Linkin06 wrote: Wed May 25, 2022 2:24 pm but i do still have question. should i not be selling anything I got within 30 days of today too? or i just can't deduct those basically.
To avoid a wash sale, you must not purchase substantially identical shares within the 30 days before, the day of, or 30 days after (the 61 day period). Period.

So, don't buy anything substantially identical within the 61 days and you won't have a wash sale.

If you do make a purchase which results in a wash, well, you have a wash. Such is life & taxes. Don't try to wash the wash, you'll just make your life more complicated unless you plan to liquidate the entire position in that fund. In which case, ask before doing it and get a second opinion beforehand.
There is nothing complicated about selling all shares purchased in the previous 30 days. It’s a couple of clicks next to the lots with the dates you need to get rid of. If the dividend had been reinvested, there is nothing hard about selling those shares and washing the wash.
That doesn't undo the wash sale, it just potentially makes it irrelevant by operation of section (d).
A distinction without a difference.
Incorrect. The service at it's discretion may always disallow the loss.
ruud
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by ruud »

VXUS’s next dividend will be paid out on 6/24. If that’s more than 30 days from when you sold it, it doesn’t matter whether you reinvest at that point or not (assuming there were no other sales)
.
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by placeholder »

Ruud has a good point before getting all worried about wash sales from dividends find out if there will be one or has been one within the exclusion period.
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by lazynovice »

Lee_WSP wrote: Wed May 25, 2022 6:38 pm
lazynovice wrote: Wed May 25, 2022 6:21 pm
Lee_WSP wrote: Wed May 25, 2022 4:20 pm
lazynovice wrote: Wed May 25, 2022 3:49 pm
Lee_WSP wrote: Wed May 25, 2022 3:17 pm

To avoid a wash sale, you must not purchase substantially identical shares within the 30 days before, the day of, or 30 days after (the 61 day period). Period.

So, don't buy anything substantially identical within the 61 days and you won't have a wash sale.

If you do make a purchase which results in a wash, well, you have a wash. Such is life & taxes. Don't try to wash the wash, you'll just make your life more complicated unless you plan to liquidate the entire position in that fund. In which case, ask before doing it and get a second opinion beforehand.
There is nothing complicated about selling all shares purchased in the previous 30 days. It’s a couple of clicks next to the lots with the dates you need to get rid of. If the dividend had been reinvested, there is nothing hard about selling those shares and washing the wash.
That doesn't undo the wash sale, it just potentially makes it irrelevant by operation of section (d).
A distinction without a difference.
Incorrect. The service at it's discretion may always disallow the loss.
Please cite a time they have done so in an exchange of VXUS and IXUS. Feel free to use even as loose a source as a Boglehead post.
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Lee_WSP
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Re: I think I just failed my first attempt at tax loss. VXUS dividend trigger wash sale?

Post by Lee_WSP »

lazynovice wrote: Wed May 25, 2022 10:11 pm
Lee_WSP wrote: Wed May 25, 2022 6:38 pm
lazynovice wrote: Wed May 25, 2022 6:21 pm
Lee_WSP wrote: Wed May 25, 2022 4:20 pm
lazynovice wrote: Wed May 25, 2022 3:49 pm

There is nothing complicated about selling all shares purchased in the previous 30 days. It’s a couple of clicks next to the lots with the dates you need to get rid of. If the dividend had been reinvested, there is nothing hard about selling those shares and washing the wash.
That doesn't undo the wash sale, it just potentially makes it irrelevant by operation of section (d).
A distinction without a difference.
Incorrect. The service at it's discretion may always disallow the loss.
Please cite a time they have done so in an exchange of VXUS and IXUS. Feel free to use even as loose a source as a Boglehead post.
You’re putting words in my mouth.
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