Tutorial: Tax Optimization

Note: Specific investments described herein do not represent all investment decisions made by Global Predictions. The reader should not assume that investment decisions identified and discussed were or will be profitable. Specific investment advice references provided herein are for illustrative purposes only and are not necessarily representative of investments that will be made in the future.

PortfolioPilot provides several powerful tools to help self-directed investors maximize tax efficiency year-round, especially when navigating capital gains, tax-loss harvesting, and year-to-date performance. This tutorial will walk you through how to use PortfolioPilot’s continuous tax optimization features, including year-to-date capital gains tax estimation, ongoing tax-loss harvesting, and tracking all securities sold.

Here’s how to get started:

Why Use PortfolioPilot's Tax Optimization Tools?

Effective tax planning can lead to significant savings, especially when selling assets or rebalancing portfolios. PortfolioPilot’s AI-powered tax optimization runs continuously, providing you with real-time opportunities to optimize your taxes. Here’s what our tools do for you:

1. Year-to-date Capital Gains Tax Estimation: Get an updated estimate of your capital gains taxes as you sell securities throughout the year.
2. Continuous Tax-loss Harvesting: Identify real-time opportunities to sell underperforming assets, offset capital gains with those losses, and ensure you don't miss tax-saving chances.
3. Overview of All Securities Sold Year-to-date: Monitor all your sales and how they impact your overall tax situation.

Year-to-date Capital Gains Tax Estimation

PortfolioPilot’s models help you estimate capital gains taxes as you make sales throughout the year. This keeps you aware of your tax obligations and allows you to make informed decisions before year-end.

Step-by-step guide:

1. Navigate to the Taxes page in PortfolioPilot.
2. At the top of the page, you'll find real-time estimates of your capital gains taxes.

Note: You can review the underlying factors that go into your calculated capital gains tax rate, based on tax-filing status, residency, and current tax brackets.

Continuous Tax-loss Harvesting on a Lot-by-lot Basis

One of the biggest advantages of PortfolioPilot is its continuous tax-loss harvesting, which runs on a lot-by-lot basis. Unlike traditional year-end strategies, PortfolioPilot identifies tax-loss harvesting opportunities in real-time and updates every time you use the product. Opportunities that exist today might not be available next week.

How it works:

1. PortfolioPilot automatically scans your portfolio to identify specific lots that are underperforming and would benefit from tax-loss harvesting.
2. Tax-loss harvesting happens continuously, meaning you can take advantage of the market’s volatility and realize losses as opportunities arise—you should not wait until year-end.
3. These opportunities are refreshed regularly, ensuring you never miss a chance to optimize your taxes.

Exclusion Note: PortfolioPilot’s tax optimization strategies exclude any robo-advisors or tax-free accounts, as those do not benefit from self-directed tax-loss harvesting.

Steps to use continuous tax-loss harvesting:

1. Go to the Taxes page and scroll down to Recommendations for tax-loss harvesting.
2. Review the list of securities currently flagged for potential tax-loss harvesting.
3. Switch to a draft portfolio to sell the security, adding the sell to your Order Execution List
4. In the slideover, use the “Search for similar securities” tool to find similar securities, noting that you cannot replace the sold security with a “substantionally identical” security or you would be breaking the wash-sale rule.

Overview of All Securities Sold Year-to-date

PortfolioPilot helps you track every sale made year-to-date, providing a detailed breakdown of each security sold and the tax implications. Staying on top of this data is essential for managing capital gains and ensuring that you are not caught off guard at tax time.

Steps to view your sold securities:

1. Navigate to the Taxes page and scroll to the Sold transactions in 2024 section.
2. Here, you’ll find a comprehensive list of all securities sold year-to-date, including the sale amount, account it was sold in, and whether the sale resulted in a capital gain or loss.
3. Use this information to ensure that your realized gains and losses are in line with your tax strategy.

Final Thoughts

By taking advantage of PortfolioPilot’s continuous tax optimization features, including ongoing tax-loss harvesting, you can stay ahead of potential tax liabilities and improve your overall portfolio performance. This tool gives you the flexibility to act on opportunities in real-time, so you can optimize your portfolio throughout the year.