Tax Loss harvesting is a strategy that can help lower taxes and boost after-tax returns—and we do it automatically. As markets move, we take advantage of declining investments by selling them and harvesting the loss. We use available funds to buy similar investments to replace those we sold, making adjustments to rebalance the portfolio. The harvested losses can be used to reduce taxes owed on other gains, or even ordinary annual income.
Your TLH harvests are simply recorded losses that are netted against any other gains and losses that were realized from the sale of shares.
Your 1099-B reflects your total net gain or loss on Page 4, between Box 1e and Box 1g, in the Short-Term Summary, as well as the Long-Term Summary.
Here are a few common reasons why the net gain/loss figure on your 1099-B may not match the amount of your TLH harvests.
- You requested an allocation change, which realized gains or losses.
- You requested a withdrawal, which realized gains or losses.
- You requested a goal to goal transfer, which realized gains or losses.
Example 1: TLH captures a $10,000 long-term loss on a 5/28/2022. You choose to do a withdrawal on 10/15/2022 which generates a $11,000 long-term gain. The Form 1099-B will reflect a net long-term gain of $1,000.
Example 2: TLH captures a $10,000 long-term loss on 5/28/2022. You choose to do a withdrawal on 10/15/2022 which generates a $3,000 long-term loss. The Form 1099-B will reflect a net long-term loss of $13,000.