InSight

What is Tax Loss Harvesting?

Financial Planning Dentist

Tax loss harvesting works by taking advantage of the tax code’s treatment of investment gains and losses. Here’s how it works:

1. Identify Investments with Losses: To start, investors review their investment portfolio to identify assets that have decreased in value since they were purchased. These are the investments that are candidates for tax loss harvesting.

2. Sell Loss-Making Investments: Once the loss-making investments are identified, investors sell them. This action triggers a capital loss, which can be used to offset capital gains generated from the sale of other investments.

3. Offset Capital Gains: The capital losses realized from the sale of these assets can be used to offset capital gains from other investments. If the total losses exceed the total gains, they can be used to offset other income, such as salary or interest income.

4. Maintain Portfolio Allocation: After selling the loss-making investments, investors may choose to reinvest the proceeds in similar assets to maintain their desired portfolio allocation and investment strategy. However, there are tax rules, such as the wash-sale rule, that restrict repurchasing the same or substantially identical assets within a specific time frame.

5. Carry Forward Unused Losses: If the total capital losses exceed capital gains and other income, the remaining losses can be carried forward to offset future capital gains and income in subsequent tax years. This can provide tax benefits in the future.

By strategically realizing losses and offsetting gains, tax loss harvesting can help investors reduce their current tax liability while maintaining their overall investment strategy.

More related articles:

Employee Retention
Articles
Kevin Taylor

Dental Practice Financial Planning Offers Employee Retention and Attraction

Dr. Koslow started his dental practice over 20 years ago and is proud to have grown to 6 dentists providing general and cosmetic dental services to children and adults. He and his team also really pride themselves on community give back. However, Dr. Koslow was finding that he wasn’t retaining staff as well as he wanted and the turn-over was costing him money. Employee Retention needed to become a priority. He knew he needed to do more to attract and retain staff. He did some research and found that employees who are happy about their workplace benefits have been shown to be four times as likely to have job satisfaction. And it’s not a long walk to see how Employee Retention paid off in his practice. However, he also discovered that only 40% (or less) of employees who want health insurance opt-in, while the other employees are left unsatisfied. Personalized but equitable benefit packages that meet the specific needs of the employees create the highest staff satisfaction. Dental practice financial planning was Dr. Koslow’s solution. Dr. Koslow brought in a dental financial advisor – someone who specialized in serving the unique financial needs of dental professionals. His staff was able to meet with the advisor on an individual basis to create their own plan according to their needs and time of their life. Some of these plans included: Retirement planning Investing in a dentist 401(k) Saving for children’s education Creating an emergency savings plan Setting up life insurance Reviewing disability insurance options In addition, Dr. Koslow was able to create a more solid long-term plan for the practice. Giving the employees the opportunity to invest in their retirement, children’s education, and savings goals has built company morale and supported effort to increase Employee Retention. “We tend to be a conversive bunch and stability speaks volumes. I knew providing a financial planning professional would build that.” Providing security and stability was key in creating a retention and attraction plan, and it was at no cost to Dr. Koslow. This is an ideal solution for businesses with tight budgets, especially when that has limited them from offering benefits in the past. Studies show about 82% of employees choose a company, or stay with a company, because of their retirement benefits. This means offering retirement planning, as well as other financial planning, helps with both attraction and retention of quality staff. Those with tight budgets who want to create employee job satisfaction and help employee retention need look no further than dental practice financial planning. Is your dental practice experiencing turn-over or a shortage of valuable, personalized benefits? Are you concerned about long-term financial health or you or your practice? A dental financial advisor can meet with you to better understand your personal and professional goals and offer a variety of solutions to create the security and stability needed for longevity and financial health in your practice. Give us a call today to learn more about dental practice financial planning.

Read More »

Pin It on Pinterest