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How to turn on Tax Loss Harvesting+

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Tax loss harvesting, or TLH for short, is the practice of selling an asset at a loss, then quickly replacing it with a substitute, all so you can offset taxes on an equal amount of income or capital gains. While TLH offers potential value for most investors, it can actually increase your tax burden in certain cases. Because of this, we don’t recommend the strategy if:

  • Your future tax bracket will be higher than your current tax bracket.
  • You can currently realize capital gains at a 0% tax rate.
  • Your (and your spouse's) taxable investments are scattered across multiple brokers.
  • You plan on withdrawing a large chunk of taxable assets soon. 

To learn more, visit our blog. Should you decide TLH is right for you, here’s how to turn on Tax Loss Harvesting+ (Betterment’s version of the strategy) for your Betterment taxable account/s.

Note: Tax loss harvesting in general cannot be used with tax-advantaged accounts such as IRAs and 401(k)s.

How to turn on Tax Loss Harvesting+ for your Betterment taxable account/s

  1. Log in to your Betterment account on a web browser
  2. Under “Your Account” in the main navigation, click on “Settings”
  3. Click on “Accounts”
  4. Under your first taxable investing account, find the “TLH+” section, click “Turn on,” then follow the prompts. Once finished, TLH+ will be applied to all taxable accounts.

Important: If your spouse also has a Betterment taxable investing account, we recommend you create a taxpayer relationship with them to reduce the likelihood of wash sales when tax loss harvesting.