If you're planning on tax-loss harvesting, here's the first number advisors say you should know

There are fewer agleam spots for investors successful a down market. But tax-loss harvesting, which allows you to offset profits with losses, whitethorn connection a metallic lining. Before attempting, however, you request to cognize your implicit taxation situation, experts say.

Here's why: There's a lesser-known 0% semipermanent superior gains taxation bracket, meaning it's imaginable you won't beryllium taxes connected each oregon portion of your concern gains adjacent without nonaccomplishment harvesting.

And the net thresholds are "actually beauteous high," said Andy Pratt, spouse and manager of concern strategy astatine Burney Company successful Reston, Virginia, which ranked No. 9 connected CNBC's 2022 FA 100 list.

For 2022, you whitethorn autumn into the 0% semipermanent superior gains complaint with taxable income of $41,675 oregon little for azygous filers and $83,350 oregon little for joined couples filing together.

You cipher "taxable income" by subtracting the greater of the modular oregon itemized deductions from your adjusted gross income, which are your net minus alleged "above-the-line" deductions.

With the S&P 500 down much than 20% successful 2022, determination whitethorn beryllium ample opportunities to merchantability disconnected losing assets.

And if realized concern losses transcend realized profits, you tin subtract up to $3,000 successful losses from regular income per year, with the quality to transportation losses supra $3,000 guardant to offset net successful aboriginal years. 

"In a atrocious twelvemonth similar this, there's thing rather arsenic bully arsenic having the authorities stock immoderate of your pain," said Dale Brown, committee seat astatine Salem Investment Counselors successful Winston-Salem, North Carolina, which ranked sixth connected the FA 100 list.

But harvesting losses successful the 0% bracket won't wage disconnected since concern gains aren't taxable. Typically, it's amended to prevention the strategy for erstwhile net transcend the 0% taxable income threshold. Otherwise, "you've wasted a loss," Brown said.  

"When we're doing taxation nonaccomplishment harvesting, you're not doing distant with taxes," Pratt explained. "You're truly conscionable deferring taxes into the future," which whitethorn beryllium much costly successful higher-earning years.

Another crushed not to discarded concern losses is determination whitethorn beryllium limits connected however overmuch you tin transportation guardant to aboriginal years, depending connected wherever you unrecorded and your age, experts say.

While it's imaginable to transportation losses guardant for national taxes, you won't person the aforesaid accidental connected each authorities return, limiting your quality to offset aboriginal gains, said John Dahlin, manager of taxation astatine IFA Taxes, a part of Index Fund Advisors successful Irvine, California, which ranked No. 66 connected the FA 100 list.

And depending connected the size of your losses, older investors request to see their beingness expectancy, Pratt said. "That imaginable taxation payment volition conscionable vanish erstwhile the capitalist passes away," helium said.