Tax loss harvesting is often hailed as a smart way to reduce your tax bill and boost your investment returns. The idea is simple: sell investments that have lost value to offset gains elsewhere in your portfolio. But as with many financial strategies, the devil is in the details. When done wrong, tax loss harvesting can actually cost you money, create headaches at tax time, or even land you in trouble with the IRS. If you’re thinking about using tax loss harvesting, or you already do, it’s crucial to know where things can go sideways. Here are ten real-world scenarios where tax loss harvesting backfired—and what you can do to avoid the same fate.
