{"id":2842,"date":"2022-08-29T15:34:30","date_gmt":"2022-08-29T19:34:30","guid":{"rendered":"https:\/\/www.thewealthguardians.com\/staging\/3023\/?p=2842"},"modified":"2024-08-02T12:37:32","modified_gmt":"2024-08-02T16:37:32","slug":"how-to-minimize-taxes-during-market-downturns","status":"publish","type":"post","link":"https:\/\/www.thewealthguardians.com\/staging\/3023\/how-to-minimize-taxes-during-market-downturns\/","title":{"rendered":"How to Minimize Taxes During Market Downturns"},"content":{"rendered":"

<\/p>\"\"Understanding long-term capital gains taxes when you sell investments<\/em>\n

Market downturns, like the one through the first half of 2022, could be a good time to adjust your fund portfolio to minimize the tax bite. Here\u2019s how to calculate the best ways to do that \u2013 now and in the future.<\/p>\n

Taxable accounts you hold longer than a year incur long-term capital gains taxes when you sell investments. You realize losses or gains, meaning your losses are subtracted from the gains and, if the result is positive, your gains are taxed at the preferable long-term capital gains rates (a rate often much less than ordinary income tax rates).<\/p>\n

The rates range are either 0%, 15% or 20%, depending on your income.<\/p>\n

\"\"<\/p>\n

Trimming Taxes<\/strong><\/p>\n

When your losses exceed your gains, your capital gains are netted against the losses and the losses subtracted from the gains. In this manner, your gains incur no tax. If your losses exceed gains, you can use the excess to reduce your ordinary income up to $3,000 per year ($1,500 if filing separately), carrying over any remaining losses to future years.<\/p>\n

Let\u2019s say your four taxable accounts (A, B, C and D) each have a cost basis (what you paid for the fund originally) of $10,000.<\/p>\n