{
  "slug": "year-end-tax-loss-harvesting-before-december-31",
  "url": "https://checklists.org/c/year-end-tax-loss-harvesting-before-december-31",
  "markdown": "https://checklists.org/c/year-end-tax-loss-harvesting-before-december-31.md",
  "title": "Year-End Tax Loss Harvesting Before December 31",
  "description": "How to sell losing investments to offset gains without tripping the wash sale rule or missing the deadline.",
  "category": "life",
  "tags": [
    "taxes",
    "investing",
    "year-end"
  ],
  "version": "1.0",
  "updated": "2026-10-04",
  "sources": [
    {
      "name": "IRS, Topic no. 409, Capital Gains and Losses",
      "url": "https://www.irs.gov/taxtopics/tc409"
    },
    {
      "name": "IRS, Publication 550, Investment Income and Expenses (wash sales, Chapter 4)",
      "url": "https://www.irs.gov/publications/p550"
    },
    {
      "name": "IRS, About Form 8949",
      "url": "https://www.irs.gov/forms-pubs/about-form-8949"
    }
  ],
  "intro": "Selling losing investments to offset gains (or up to $3,000 of ordinary income) is one of the few tax moves with a hard, immovable deadline. Here's how to do it without tripping the wash sale rule or missing the cutoff.",
  "itemCount": 19,
  "essentialCount": 7,
  "sections": [
    {
      "title": "Take Stock of Where You Stand",
      "items": [
        {
          "id": "tz75l3",
          "text": "Pull every taxable account's realized gains/losses for the year so far",
          "note": "You can't know how many losses you need to harvest until you know your gains; check brokerage \"realized gain/loss\" reports, not just account balances.",
          "essential": true
        },
        {
          "id": "1iw3iyv",
          "text": "List unrealized losers across all taxable accounts",
          "note": "Include stocks, ETFs, mutual funds, and crypto; skip anything in a 401(k) or IRA, since losses there aren't deductible."
        },
        {
          "id": "udkt2a",
          "text": "Separate short-term losses from long-term losses",
          "note": "Short-term losses offset short-term gains first (taxed at higher ordinary rates), so matching the right loss to the right gain matters."
        },
        {
          "id": "107sy88",
          "text": "Check for any loss carryover from prior years",
          "note": "It rolls forward and stacks with this year's harvest, so you may already have more loss than you think."
        }
      ]
    },
    {
      "title": "Plan the Trades",
      "items": [
        {
          "id": "197ov7v",
          "text": "Decide which lots to sell using specific identification, not FIFO",
          "note": "Tell your broker in writing which exact lots to sell so you lock in the loss you intend, not whatever the default method picks.",
          "when": "multiple-purchase-lots"
        },
        {
          "id": "7i5xag",
          "text": "Check for any dividend reinvestment in the last 30 days on a security you're about to sell at a loss",
          "note": "A reinvested dividend counts as a new purchase and can trigger a wash sale that disallows the loss.",
          "essential": true
        },
        {
          "id": "wpdtsb",
          "text": "Confirm you (or your spouse, or your IRA) haven't bought the same or a \"substantially identical\" security in the 30 days before the planned sale",
          "note": "The wash sale window is 61 days total (30 before, the sale day, 30 after); buying it back in that window — even in a different account, even in an IRA — disallows the loss.",
          "essential": true
        },
        {
          "id": "t6eu0j",
          "text": "Pick a similar but not identical replacement if you still want market exposure",
          "note": "E.g., swap one S&P 500 fund for a different provider's S&P 500 fund rather than buying back the exact same ticker; this avoids the wash sale while keeping you invested."
        },
        {
          "id": "qdq69t",
          "text": "Note that crypto currently isn't subject to the wash sale rule",
          "note": "Under current law you can sell a losing coin and immediately buy it back without the 30-day restriction, though this has been proposed for change in past legislation, so don't assume it stays this way forever.",
          "when": "harvesting-crypto-losses"
        },
        {
          "id": "z2in99",
          "text": "Watch for related-party wash sales",
          "note": "If a spouse or an entity you control buys the same security back in the window, the loss is still disallowed.",
          "when": "spouse-or-controlled-entity-trading"
        }
      ]
    },
    {
      "title": "Execute Before the Deadline",
      "items": [
        {
          "id": "c8ld3y",
          "text": "Place sell orders by market close on the last trading day of December, not December 31 itself if it falls on a weekend",
          "note": "It's the trade date, not the settlement date, that determines the tax year, but markets close early or are closed around the holidays, so confirm the actual last trading day on your exchange's calendar.",
          "essential": true
        },
        {
          "id": "1ftkhfl",
          "text": "Don't wait until the last day to place trades",
          "note": "Illiquid or low-volume securities can be hard to sell at a fair price in a rush; give yourself a buffer of a few business days."
        },
        {
          "id": "16a4zb",
          "text": "Confirm each trade actually executed, not just submitted",
          "note": "An unfilled limit order doesn't count; check your confirmation statement, not just your order history."
        },
        {
          "id": "rixjfp",
          "text": "If replacing a sold position, buy the replacement on a different trade date than the sale",
          "note": "Avoids any ambiguity about same-day wash sale timing."
        }
      ]
    },
    {
      "title": "Reconcile and File",
      "items": [
        {
          "id": "4zzeag",
          "text": "Match harvested losses against realized gains to see your net result",
          "note": "Short-term losses offset short-term gains, long-term offset long-term, and any leftover of either type offsets the other."
        },
        {
          "id": "17hwb1n",
          "text": "Remember the $3,000 annual limit against ordinary income",
          "note": "If losses exceed gains, you can only deduct $3,000 ($1,500 if married filing separately) against wages/other income per year; the rest carries forward indefinitely, but only if you report it.",
          "essential": true
        },
        {
          "id": "gsfc9s",
          "text": "Check your 1099-B in early the following year against your own trade records",
          "note": "Brokers sometimes miscode wash sales or miss cost basis on transferred shares; catching errors before filing saves an amended return later.",
          "essential": true
        },
        {
          "id": "t1t0",
          "text": "Report trades on Form 8949 and Schedule D, and carry forward any unused loss on the Capital Loss Carryover Worksheet",
          "note": "The carryover doesn't apply itself; it has to be tracked and re-entered every year until it's used up.",
          "essential": true
        },
        {
          "id": "6ufglb",
          "text": "Keep your trade confirmations and cost-basis records for at least the IRS statute of limitations",
          "note": "Typically 3 years from filing, longer if underreporting is a risk."
        }
      ]
    }
  ]
}