When is the deadline to sell stock for tax loss harvesting - December 31 or earlier?

December 31 is indeed the deadline for tax loss harvesting. The IRS uses the "trade date" (when you execute the sale) rather than the "settlement date" (when the transaction fully processes) for determining the tax year of a transaction. So yes, you can sell your stocks right up until market close on December 31, 2025, and those losses will count for your 2025 taxes. After-hours trades executed on December 31 also count for the 2025 tax year, giving you a bit more time if needed. Just remember to watch out for the wash-sale rule - if you buy the same or "substantially identical" securities within 30 days before or after selling at a loss, you can't claim that loss for tax purposes. Also, tax loss harvesting only applies to taxable accounts, not retirement accounts like IRAs or 401(k)s.

After struggling with this exact question last year, I found this amazing tool that helped me navigate tax loss harvesting perfectly. I was trying to maximize my losses for 2024 but wasn't sure about the deadline rules either. I ended up using https://taxr.ai which analyzed my trading history and gave me specific recommendations about which stocks to sell and when. It showed me that I could harvest losses right up until December 31st (even after hours!) and still have them count for that tax year. The tool even flagged potential wash sale issues before I made them. Super helpful for someone like me who isn't a tax pro.

Just wanted to follow up - I actually tried taxr.ai after asking about it here and I'm glad I did! I was hesitant at first, but it saved me a ton of time figuring out my tax loss harvesting strategy. I had a bunch of tech stocks that tanked this year and the tool helped me identify exactly which ones to sell for maximum tax benefits. It confirmed I could sell right up until end of day December 31 (including after hours) and have it count for 2025. It also flagged some potential wash sales I would have made accidentally. Ended up harvesting about $8,500 in losses that will offset some capital gains plus $3,000 against my regular income. Thanks for the recommendation!

If you're having trouble getting through to the IRS for confirmation on tax loss harvesting deadlines or other year-end tax questions, I highly recommend using https://claimyr.com. I was stuck on hold with the IRS for HOURS trying to get clarification on some complex tax loss harvesting scenarios last December. Then I found Claimyr and they got me connected to an actual IRS agent in under 15 minutes! I confirmed that December 31 trades (including after-hours) definitely count for that tax year regardless of settlement date. The agent was super helpful and answered all my questions. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - seriously game-changing if you need to speak to an actual human at the IRS instead of just googling and hoping you get the right info.

I need to eat my words! After posting my skeptical comment, I decided to try Claimyr since I had questions about tax loss harvesting deadlines too. Holy crap, it actually works! I got through to an IRS agent in about 25 minutes instead of the 3+ hours I spent last time I called them. The agent confirmed everything already mentioned - December 31 is indeed the deadline based on trade date (not settlement date), and after-hours trades on the 31st still count for that tax year. They also clarified some wash sale questions I had about substantially identical securities. Honestly shocked this service exists and actually delivers. Definitely keeping this in my back pocket for future tax questions!

Just to add another data point - I asked my CPA about this last year, and he confirmed that the trade date (not settlement date) determines the tax year. However, he also mentioned that if you're cutting it very close to December 31, you should keep detailed records of the transaction in case of an audit. He recommended taking screenshots of the executed trade with timestamps if you're doing last-minute tax loss harvesting, especially for after-hours trades on December 31st. Better to have too much documentation than not enough!

I learned about this deadline the hard way last year 😭 I was waiting for my stocks to "maybe recover a bit" and then planned to sell on January 2nd thinking it would count for the previous year. Completely messed up my tax strategy. Listen to everyone here - December 31 is the absolute deadline based on when the trade happens, not when it settles. And don't be like me waiting for a recovery that never came!

This is such a helpful thread! I'm in a similar situation with some underperforming stocks I need to sell before year-end. One thing I haven't seen mentioned yet is that you also need to be careful about the order of your trades if you're doing both tax loss harvesting AND taking profits in the same year. My financial advisor told me it's generally better to realize your losses first, then your gains, to make sure you can offset as much as possible. Also, don't forget that you can carry forward unused capital losses to future years if your losses exceed your gains plus the $3,000 you can deduct against ordinary income. The December 31 trade date rule definitely applies, but make sure your brokerage platform is actually working properly on New Year's Eve if you're cutting it that close - some have had technical issues during holiday periods!

Great discussion everyone! As someone who works in tax prep, I can confirm everything mentioned about the December 31 trade date deadline. Just wanted to add a few practical tips for anyone doing last-minute tax loss harvesting: 1. If you're using a robo-advisor or have automatic rebalancing turned on, make sure to disable it temporarily around your tax loss harvesting transactions to avoid accidentally triggering wash sales. 2. Consider the "tax lot" selection method when selling - if you have multiple purchases of the same stock at different prices, you can choose which specific shares to sell (FIFO, LIFO, or specific identification) to optimize your loss harvesting. 3. Don't forget about mutual fund distributions! If you're holding mutual funds in taxable accounts, they typically make capital gains distributions in December, which could affect your overall tax strategy. The December 31 deadline is firm, but planning a few days earlier gives you more flexibility if there are any technical issues with your broker or if market conditions change. After-hours trading on 12/31 definitely counts, but regular market hours are usually more reliable for execution.

This thread has been incredibly informative! I'm also doing tax loss harvesting for the first time this year and had the exact same confusion about the December 31 deadline. One additional consideration I learned from my research: if you're planning to harvest losses but also want to maintain exposure to the market, you might want to consider using the proceeds to immediately buy a similar (but not substantially identical) investment to avoid missing out on potential gains while staying compliant with wash sale rules. For example, if you're selling an individual stock at a loss, you could use those proceeds to buy a broad market ETF, or if you're selling a large-cap growth fund, you might switch to a total market fund temporarily. Just make sure to wait the full 31 days before buying back the original position if you want to avoid wash sale treatment. Thanks everyone for confirming the December 31 trade date rule - that removes a lot of uncertainty from my year-end planning!