When can I buy stock back after tax gain harvesting? Selling before year end to minimize capital gains tax

Thanks for the clear explanation! So just to confirm - if I sell Stock A on December 29th for a $5,000 profit, I could buy back Stock A on December 30th with no issues? And that $5,000 gain would still be taxed at my current year's rate (hopefully 0%)? Also, would there be any benefit to waiting until January to buy back, or does it really not matter when I repurchase?

Yes, you've got it exactly right! If you sell Stock A on December 29th for a $5,000 profit, you can absolutely buy it back on December 30th with no issues whatsoever. That $5,000 gain would be taxed at your current year's rate (which would be 0% federal long-term capital gains tax given your income level). There's no tax benefit to waiting until January to repurchase. The tax consequences are determined at the moment of sale. The only potential reason to wait until January might be if you're concerned about short-term market volatility, but that's a market timing question, not a tax question.

How accurate was their analysis compared to what actually happened when you filed? Did you have to pay for an accountant anyway to double-check everything? I'm considering trying something like this but worried about relying on software for something this important.

Did it handle state tax calculations too? I'm in California and even though federal might be 0%, I know our state still taxes capital gains pretty high. Does the tool account for that?

The analysis was spot-on when I filed. Everything matched exactly what they projected, and I didn't need an accountant to verify. I just downloaded their report and used it when preparing my taxes. It was much more straightforward than I expected. Yes, it definitely handled state taxes! That was actually one of the most helpful parts. It showed me exactly how much I'd owe to California (which taxes capital gains as regular income), so I could factor that into my overall strategy. It gives you both federal and state tax implications, which helped me avoid surprises.

How does this service actually work? I thought you couldn't pay to skip the IRS line. Is this actually legit or some kind of scam?

I'm extremely skeptical about this. I've tried "get to a human at the IRS" services before and they never worked. What makes this different? And even if you get through, how do you know the agent is giving you correct information? I've gotten wrong answers from IRS reps before.

It works by calling the IRS and navigating their phone tree for you, then it calls you when it's about to connect with an agent. You're not paying to skip the line - you're paying for a service that waits on hold for you. Completely legitimate and not a scam at all. The difference is that this actually works consistently. I was skeptical too, but it literally does what it says - waits on hold so you don't have to. As for getting correct information, I always verify important tax info from multiple sources. In this case, what the agent told me matched what my research showed, which gave me confidence I was getting accurate guidance.

Oh, that's a really good point I hadn't considered! I do get a premium tax credit for my health insurance. Do you know roughly what income threshold I need to stay under to avoid issues with that? And would selling in January of next year instead help with this situation?

Premium tax credit thresholds depend on your household size and the federal poverty level, but generally you start to see reductions when your income exceeds 400% of the federal poverty level (though there are temporary exceptions due to recent legislation). For a single person, that's around $54,000 in 2023. Selling in January of next year wouldn't help if you're trying to take advantage of your current low income situation. It would just push the taxable event into next year's return. If you expect to have similar income next year, that might be fine, but if you expect higher income next year, better to harvest gains now while you're in a lower bracket.

ETFs and individual stocks follow the same rules for tax gain harvesting. The key factor is how long you've held the investment (over 1 year for long-term capital gains rates), not what type of security it is. The only slight difference is that ETFs might be more tax-efficient in general due to how they're structured, but the harvesting process is identical.

Thanks for the additional tips! The specific identification strategy is something I hadn't thought about. If I have multiple purchases of the same stock at different prices, can I choose to sell just the lots with the highest gains to maximize my tax harvesting? Or would that create any complications? Also, regarding transaction fees - most brokerages have eliminated commission fees for stock trades now, but are there any other hidden costs I should watch out for when doing this strategy?

Yes, you can absolutely use specific identification to sell the lots with the highest gains! This is actually one of the most powerful aspects of tax gain harvesting. You just need to specify to your broker which exact shares you're selling (usually by purchase date and price) before executing the trade. Most online brokers have tools that let you select specific lots when placing sell orders. This won't create any complications - it's a completely legitimate tax strategy. Just make sure to keep good records of which lots you sold in case the IRS ever asks for documentation. You're right that most major brokers have eliminated stock trading commissions, but there are still a few potential costs to watch for: - Some brokers still charge fees for penny stocks or over-the-counter trades - Foreign transaction fees if you're trading international stocks - Bid-ask spreads (not technically a fee, but can impact your net proceeds) For most standard stock and ETF trades at major brokers like Fidelity, Schwab, or Vanguard, you shouldn't have any fees that would meaningfully impact your harvesting strategy. The tax savings will far outweigh any minor spread costs.