With a Little Tax-Loss Harvesting and the Right Know-How, You Can Maximize Your Tax Refund in 2024.


The isolated location. The mysterious stranger. That frightening, daunting, and suspenseful feeling.

In October, taxes can feel a lot like a movie, but instead of the usual horror tropes, you are overwhelmed by forms, deductions, and potential pitfalls.

But with the right strategies, you can maximize your refund and even aim to reduce your tax burden.

Let’s explore two key strategies: Tax-loss harvesting (because autumn is always a great time to think about harvesting) and maximizing your refund.

Tax-Loss Harvesting

Tax-loss harvesting is a powerful tool that can help you offset capital gains and reduce your taxable income. By selling investments that have lost value, you can use the losses to offset gains from other investments. Here’s how it works:

  1. Identify Underperforming Assets: Review your portfolio and pinpoint investments that have decreased in value since you purchased them.
  2. Sell at a Loss: Sell the underperforming assets to realize the capital loss.
  3. Offset Gains: Use the realized losses to offset capital gains from other investments.
  4. Reduce Taxable Income: If capital losses exceed capital gains in a given tax year, up to $3,000 of the excess losses can be used to offset ordinary income annually. Any remaining losses can be carried forward to future tax years.
  5. Avoid the Wash-Sale Rule: Be mindful of the wash-sale rule, which prevents you from tax-loss harvesting if you repurchase the securities within 30 days of selling them at a loss.

Maximizing Your Refund: A Step-by-Step Guide

With your losses harvested, we can examine how to maximize your tax refund. Here are 10 strategies to consider:

  1. Adjust Your Withholding: Ensure your W-4 form is up to date to avoid overpaying or underpaying taxes throughout the year.
  2. Claim All Deductions: Itemize your deductions if they exceed the standard deduction. Common deductions include mortgage interest, charitable contributions, and medical expenses.
  3. Contribute to Retirement Accounts: Contributions to traditional IRAs and 401(k)s can reduce your taxable income.
  4. Take Advantage of Tax Credits: Credits directly reduce your tax liability. Explore options like the Earned Income Tax Credit, Child Tax Credit, and education credits.
  5. Education Expenses: If you or your dependents attended college, claim deductions for tuition and fees as well as student loan interest.
  6. Utilize Health Savings Accounts (HSAs): If you have a high-deductible health plan, contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free.
  7. Explore Energy Credits: If you made energy-efficient improvements to your home, you may be eligible for tax credits.
  8. Consider State and Local Tax Credits: Check for credits specific to your state and local area.
  9. Maximize Self-Employment Deductions: If you are self-employed, claim deductions for home office expenses, vehicle expenses, and health insurance premiums.
  10. File Electronically and Early: Filing electronically can speed up the process, and filing early can help reduce the risk of identity theft.

By combining tax-loss harvesting with these strategies, you can work to significantly reduce your tax liability and potentially increase your refund. Remember, you aren’t in this alone. Simply get in touch so that we can provide personalized advice tailored to your specific situation.

Together, we can take the fear out of taxes and save the tricks for trick-or-treating.