Tax loss selling is a common tactic that many investors use to offset their capital gains and reduce their tax liabilities. By selling some of their losing investments, they can reduce the taxes they owe on their profits. As the year draws to a close, it’s important to mark these key tax loss selling dates on your calendar so you don’t miss out on any potential tax savings.
Traditionally, traders have two windows in which to take advantage of tax loss selling: the end of the year and the beginning of the following year. However, the late introduction of the SECURE Act of 2020 created an additional window that ends in March 2023. This window was created to allow investors to sell investments with significant losses to offset capital gains that would be recognized under the new tax code. Here are the important dates to know about tax loss selling in 2023:
January 1st, 2023: The traditional tax loss selling window opens. This is when most investors begin to take advantage of capital losses by selling investments in their portfolios that have lost value since the previous tax year.
February 25th, 2023: Investors must submit their estimated tax payments for 2020 if they have not done so already, in order to be eligible to take advantage of the midyear tax loss window.
March 15th, 2023: The midyear tax loss selling window opens. This window was created as part of the SECURE Act and allows investors to sell investments with significant losses from 2020 in order to offset capital gains for 2020 as well as 2021.
March 31st, 2023: The midyear tax loss selling window closes. This is the last date that investors can sell investments in order to offset losses for 2020 and 2021. After this date, the traditional tax loss selling window will remain open until the end of the year.
While the midyear tax loss window has provided investors with an additional opportunity to take advantage of tax savings, it is important to remember that timing is critical. Decisions related to tax loss selling should be made in consultation with a professional financial advisor. This will help ensure that all of the necessary steps are taken and that investors take full advantage of the available tax breaks. By marking these important tax loss selling dates on your calendar now, you can ensure that you don’t miss out on any potential tax savings.
