Questions on wash sale rule when exchanging VOO for VTI - different indices but correlated

The IRS defines a wash sale as selling a security at a loss and purchasing a "substantially identical" security within 30 days before or after the sale. The key question is whether VOO and VTI are "substantially identical" - and this is where it gets tricky. While VOO and VTI are highly correlated (as you noted, around 98%), they do track different indices and have significantly different compositions. VOO follows the S&P 500 with about 500 holdings, while VTI tracks the total stock market with over 3,500 holdings. VTI essentially contains all of VOO plus thousands of mid and small-cap stocks. Most tax professionals would likely argue these are not substantially identical securities since they track different indices with different compositions. However, the IRS has never provided definitive guidance specifically about ETFs tracking different but overlapping indices. If you're being cautious, waiting 31+ days before repurchasing VOO is the safest approach. If you do claim the loss, be prepared to defend your position that these are not substantially identical if questioned.

I was in a similar situation last year trying to harvest some tax losses without triggering wash sales. After a lot of research, I ended up using taxr.ai to analyze my specific situation. Their software actually has a specific feature that analyzes ETF pairs for wash sale risk. In my case, I was swapping between similar sector ETFs, and their analysis showed the holdings overlap percentage and gave a risk assessment. The report they generated was really helpful when I filed my taxes as supporting documentation. You might want to check out https://taxr.ai if you're concerned about how the IRS might view your specific ETF swap.

I was really skeptical about these tax analysis services too, but I ended up trying taxr.ai after reading about it here. I was in a similar situation with some Vanguard/iShares ETF swaps I did last year. Their analysis was surprisingly detailed - they actually provided a percentage breakdown of the holdings overlap and even referenced relevant tax court cases about "substantially identical" securities. The report they generated gave me enough confidence to claim my losses. What I found most helpful was their specific section on ETF pairs that addressed exactly what the OP is asking about. They explained that while correlation is high between total market and S&P funds, the composition differences are significant enough that most tax professionals consider them distinct securities.

After waiting on hold with the IRS for over 2 hours trying to get clarification on a similar wash sale question, I finally discovered Claimyr. It's a service that basically waits on hold with the IRS for you and then calls you when an agent picks up. I was able to get a clear answer from an actual IRS agent about my ETF swap situation without wasting my entire afternoon on hold. I highly recommend checking out https://claimyr.com if you want definitive guidance. You can see how it works at https://youtu.be/_kiP6q8DX5c - it literally saved me hours of frustration.

I was extremely skeptical about Claimyr, but after waiting on hold for 3+ hours myself and getting disconnected twice, I finally tried it when dealing with a wash sale question for my S&P 500 vs Total Market ETF swap. It actually worked exactly as advertised. They called me when they reached an agent, and I was able to speak directly with someone at the IRS. What surprised me was that the agent was quite knowledgeable and walked me through the "substantially identical" criteria they typically apply. For my specific situation with VOO and VTI, the agent explained that while they couldn't give formal tax advice, the fact that one tracks 500 companies and the other tracks 3500+ companies would generally be considered a material difference in composition. They suggested documenting the index differences, holdings count differences, and performance divergence as supporting evidence.

I did exactly this last year with VTI and VOO to harvest some losses. I documented the differences between the funds (different prospectuses, different indexes, different number of holdings) and claimed the loss. The key thing is that they track fundamentally different indexes - one is the total market and one is large cap only. Despite the high correlation, they are technically different securities. The IRS hasn't provided clear guidance specifically about ETFs, but the general consensus among tax professionals is that different indexes = different securities. I'd recommend keeping documentation of the differences between the funds with your tax records just in case.

Another option to consider - instead of going back to VOO after selling VTI, you could buy a different S&P 500 ETF like IVV (iShares Core S&P 500) or SPY (SPDR S&P 500). These track the exact same index as VOO but are issued by different companies. Some tax professionals argue this approach is riskier from a wash sale perspective since they track the identical index, but others argue that different fund companies with different expense ratios and different legal structures make them not "substantially identical." The IRS hasn't provided definitive guidance specifically on this situation either.

I think you're safe with this strategy. The key is that VOO and VTI track fundamentally different indices with substantially different compositions. The IRS has never provided specific guidance on ETFs that track different indices, but most tax professionals consider them different securities. Just document the differences between the funds (different indexes, different compositions - 500 vs 3500+ holdings) and keep good records of your transactions with dates clearly noted. The high correlation doesn't make them identical securities since one contains significantly more holdings than the other. If you're still concerned, waiting the full 31 days is always the safest approach, but based on my experience as someone who has done similar tax-loss harvesting between different index ETFs, you should be fine claiming the loss.

Based on the discussion here, I think you're likely in safe territory with your VOO to VTI swap. The fundamental difference is that VOO tracks the S&P 500 (large-cap only, ~500 holdings) while VTI tracks the entire U.S. stock market (~3,500+ holdings including mid and small-cap stocks). While the correlation is high, the composition difference is substantial - VTI literally contains thousands of securities that VOO doesn't hold. Most tax professionals would argue these are not "substantially identical" securities under the wash sale rules. That said, the IRS hasn't provided definitive guidance on ETFs specifically, so there's always some uncertainty. To strengthen your position, I'd recommend: 1. Document the key differences between the funds (different indices, different number of holdings, different investment objectives) 2. Keep copies of both fund prospectuses showing the different investment strategies 3. Note the specific dates of your transactions Your plan to hold VTI for 6-7 weeks before switching back to VOO gives you even more cushion beyond the 30-day wash sale period. If you want to be extra conservative, you could wait the full 31+ days, but based on the compositional differences between these funds, you should be able to claim your tax loss.

I've been through a similar situation and can share some practical experience. Last year I did almost exactly what you're describing - sold VTI at a loss and immediately bought VOO (opposite direction from yours, but same principle). The key factor that gave me confidence was the substantial difference in fund composition. VOO holds approximately 500 large-cap stocks from the S&P 500, while VTI holds over 3,500 stocks across the entire U.S. market including small and mid-cap companies. That's not just a correlation difference - it's a fundamental difference in what you actually own. I documented everything carefully: saved the fund fact sheets showing different indices tracked, different number of holdings, and different investment objectives. I also kept a simple spreadsheet showing the transaction dates and my rationale (wanting broader market exposure vs. large-cap focus). The IRS defines "substantially identical" quite narrowly - they're looking at the actual securities held, not just performance correlation. Since VTI contains thousands of stocks that VOO doesn't hold at all, most tax professionals consider them sufficiently different. Your plan to hold for 6-7 weeks gives you extra protection beyond the 30-day rule anyway. I'd say you're in good shape to claim the loss, just keep good documentation of the differences between the funds.

Based on all the discussion here, I think there's a strong consensus that your VOO to VTI swap should be safe from wash sale rules. The fundamental differences are compelling - VOO tracks the S&P 500 with ~500 large-cap stocks, while VTI tracks the total U.S. market with 3,500+ stocks including mid and small-cap companies. What I find most reassuring is that this isn't just about correlation or performance similarity - VTI literally contains thousands of securities that don't exist in VOO at all. That's a substantial compositional difference that goes well beyond what the IRS typically considers "substantially identical." A few practical tips from reading through everyone's experiences: 1. Document the key differences now while the transaction is fresh - save fund fact sheets, prospectuses, and comparison charts showing different indices and holdings counts 2. Note your investment rationale beyond tax benefits (like wanting broader market exposure vs. large-cap focus) 3. Keep a simple transaction log with dates and reasoning Your 6-7 week holding period gives you extra cushion beyond the 30-day wash sale window anyway. While the IRS hasn't provided explicit guidance on ETF swaps, the weight of professional opinion seems to favor treating different indices as different securities, especially with such significant compositional differences. The real-world experiences shared here from people who've done similar swaps successfully should give you additional confidence in your strategy.

I've been doing tax-loss harvesting for several years and want to add another perspective to this discussion. Your VOO to VTI swap is actually one of the safer ETF swaps you can make from a wash sale perspective. The reason is that these funds have what I call "nested differences" - not only do they track different indices (S&P 500 vs. CRSP US Total Market), but VTI essentially contains ALL of VOO plus about 3,000 additional securities. This creates multiple layers of differentiation that go well beyond just correlation analysis. From a practical standpoint, I've done this exact swap multiple times in both directions over the years and have never had any issues. The key is that you're moving between fundamentally different market exposures - large-cap only vs. total market including small/mid-cap stocks. One additional tip: if you're concerned about tracking error during your holding period, remember that VTI will generally track very closely to VOO during normal market conditions (due to the market-cap weighting), but will diverge during periods when small/mid-cap stocks outperform or underperform large-caps. This actually strengthens your case that they're different securities with different risk/return profiles. Your 6-7 week timeline is more than adequate, and the documentation approach others have mentioned is spot-on. Save those fund prospectuses showing the different investment objectives and index methodologies.

As someone who works in tax preparation, I want to emphasize that your VOO to VTI strategy is well within accepted practice for tax-loss harvesting. The compositional differences are substantial enough that the vast majority of tax professionals would support claiming the loss. What many people don't realize is that the IRS "substantially identical" rule was originally written for individual stocks and bonds, not modern ETFs. When they say "substantially identical," they're primarily concerned with situations like selling IBM stock and immediately buying IBM stock, or selling a specific corporate bond and buying the identical bond from the same issuer. ETFs that track different indices - even highly correlated ones - present a different situation entirely. VOO and VTI have different prospectuses, different legal structures, different expense ratios, and most importantly, dramatically different holdings (500 vs 3,500+ securities). The 98% correlation you mentioned is actually not unusual for broad market ETFs and doesn't make them "substantially identical" in the tax code sense. What matters is the underlying composition and investment objective, not performance correlation. Your documentation approach is smart, and the 6-7 week holding period gives you extra protection. I've prepared hundreds of returns with similar ETF swaps and have never seen the IRS challenge this type of strategy when it involves different indices with materially different compositions.

Based on my experience with tax-loss harvesting, you're in very safe territory with your VOO to VTI swap. The key distinction here is that these aren't just correlated funds - they represent fundamentally different investment strategies with materially different compositions. VOO provides exposure to 500 large-cap U.S. companies through the S&P 500 index, while VTI gives you the entire U.S. stock market including thousands of mid and small-cap stocks that VOO doesn't hold at all. This isn't a subtle difference - VTI literally contains about 85% more securities than VOO. The "substantially identical" test focuses on the actual securities held and investment objectives, not performance correlation. Many broad market ETFs show high correlation but track completely different segments of the market. Your documentation strategy is spot-on - keep those prospectuses and fund fact sheets showing the different indices and holdings counts. From a practical standpoint, your 6-7 week holding period gives you significant cushion beyond the 30-day wash sale window. Even if you had concerns about the wash sale rule, the timeline alone would protect you. But given the substantial compositional differences between these funds, most tax professionals would argue the wash sale rule doesn't apply at all since they're not substantially identical securities. I've used similar strategies for years without issue. The consensus among tax professionals is clear - different indices with meaningfully different compositions are treated as different securities for tax purposes.

Great discussion everyone! As someone who's been following this thread closely, I wanted to add that the documentation approach mentioned by several people here is crucial not just for potential IRS questions, but also for your own peace of mind. I'd suggest creating a simple "tax-loss harvesting log" that includes: (1) transaction dates, (2) the specific funds involved, (3) key differences between the funds (indices tracked, number of holdings, expense ratios), and (4) your investment rationale beyond tax benefits. This creates a clear paper trail showing you understood the economic differences between the securities. One thing I haven't seen mentioned is that you might also want to screenshot the fund comparison tools from Vanguard's website or Morningstar that visually show the overlap and differences between VOO and VTI. These comparison charts can be compelling visual evidence of the compositional differences if you ever need to defend your position. Your strategy sounds solid - the 500 vs 3,500+ holdings difference is substantial, and the professional consensus in this thread is remarkably consistent. The fact that multiple experienced tax-loss harvesters have done this exact same swap successfully should give you confidence you're on the right track.

I've been following this discussion with great interest as someone relatively new to tax-loss harvesting strategies. The consensus here is really reassuring - it seems like the VOO to VTI swap is about as safe as you can get when it comes to avoiding wash sale issues. What particularly stands out to me is how the compositional differences go far beyond just correlation. We're talking about 500 holdings versus 3,500+ holdings - that's not a subtle distinction. VTI literally contains the entire VOO portfolio plus thousands of additional mid and small-cap stocks that don't exist in VOO at all. The documentation strategies mentioned here are fantastic. I especially like the idea of keeping fund comparison screenshots and creating a transaction log with investment rationale beyond tax benefits. It shows that these swaps have genuine economic substance and aren't just paper shuffling for tax purposes. For anyone else considering this strategy, the professional consensus in this thread seems crystal clear: different indices with substantially different compositions are treated as different securities for wash sale purposes. The fact that multiple experienced practitioners have executed this exact strategy successfully, combined with the overwhelming compositional evidence, makes this a very defensible position. Your 6-7 week holding period gives you extra protection beyond what's even necessary. Based on everything shared here, I'd say you can move forward with confidence in claiming your tax loss.

This thread has been incredibly thorough and reassuring! As someone who's been hesitant to try tax-loss harvesting due to wash sale concerns, seeing the unanimous consensus from tax professionals and experienced practitioners gives me confidence to finally implement this strategy. The key insight that really clicked for me is that VTI doesn't just correlate with VOO - it literally contains ALL of VOO plus thousands of additional securities. That's not correlation, that's a fundamental difference in what you actually own. When you put it in terms of 500 holdings versus 3,500+ holdings, the distinction becomes undeniable. I'm particularly impressed by the documentation strategies shared here. Creating a transaction log with investment rationale, saving fund prospectuses, and keeping comparison screenshots showing the massive holdings difference - these create a paper trail that clearly demonstrates the economic substance behind the swap. What's most compelling is the real-world track record. Multiple people have executed this exact strategy successfully over several years, tax preparers regularly see these transactions without IRS challenges, and even direct IRS agent feedback supports the position that different indices create sufficient distinction for tax purposes. Your 6-7 week timeline is extremely conservative and gives you multiple layers of protection. Based on everything shared in this discussion, you should feel very confident proceeding with your strategy and claiming the tax loss. The compositional differences between these funds make this one of the safer ETF swaps you can make for tax-loss harvesting purposes.

As a tax professional who regularly advises clients on wash sale rules, I want to reinforce the excellent consensus that's emerged in this thread. Your VOO to VTI strategy is well-supported both legally and practically. The critical factor here is that these funds track fundamentally different market segments with materially different investment objectives. VOO provides large-cap exposure through the S&P 500, while VTI offers total market exposure including mid and small-cap stocks that VOO excludes entirely. This isn't about correlation - it's about owning distinctly different portfolios. From a compliance perspective, I always advise clients to focus on three key elements: (1) different underlying indices, (2) substantially different holdings composition, and (3) legitimate investment rationale beyond tax benefits. Your swap clearly meets all three criteria. The documentation approach discussed here is excellent - save fund prospectuses, comparison charts showing holdings differences, and maintain a transaction log with your investment reasoning. The IRS respects transactions with genuine economic substance, and the compositional differences between these funds provide exactly that. Your 6-7 week holding period exceeds what's necessary given the substantial differences between these securities, but it provides additional comfort. Based on my experience with similar client situations, you should feel confident claiming this loss while maintaining proper documentation.