Many people wait until the last minute to think about tax planning. But procrastination can really cost you. When it comes to harvesting tax losses, it pays to get a jump on the rest of the investing world.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about tax-loss harvesting and why you shouldn't wait to get it done. By selling losing stocks, you can use capital losses to offset any gain as well as up to $3,000 of other types of income, including wages and investment income. Dan notes that most taxpayers wait until the end of the year to lock in tax losses, but doing so beforehand can help you avoid the rush and potentially get better prices for your shares. Dan concludes with some ideas on smart stocks to consider for the strategy, pointing out that while the bull market has sent many stocks higher, Annaly Capital (NYSE: NLY ) has suffered steep losses this year on interest rate concerns. Gold stocks Barrick Gold (NYSE: ABX ) , Newmont Mining (NYSE: NEM ) , and Goldcorp (NYSE: GG ) could also be good tax-loss harvesting candidates for relatively new investors.
The silver lining from losses
Getting benefits from tax losses is just one way you can help reduce your bill to Uncle Sam. In our brand-new special report "How You Can Fight Back Against Higher Taxes," The Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.