This post provides instructions to execute tax loss harvesting using a Fidelity brokerage account. For more background on tax loss harvesting, see my comprehensive tax loss harvesting guide for beginners:
- Part 1: tax loss harvesting background and account preparation
- Part 2: executing the tax loss harvest
- Part 3: what to do after tax loss harvesting plus advanced tips
Fidelity Tax Loss Harvesting Walkthrough
- Click on “Accounts & Trade” at the top left of your screen, then click “Account Positions”
- You will now see a list of all your funds for each account you hold. You want to determine whether any funds in your regular taxable brokerage account have a loss. To do so, you must click on the name of each fund then click “Purchase History / Lots” to see your gain or loss for each individual lot. This means you should have a separate row for every time you added money to a fund.
If you cannot see your individual lots, you need to switch your cost basis method. See how to set up your Fidelity account for tax loss harvesting.
- Identify any lots across all your funds that are “in the red” and have losses overall. The “Total Gain/Loss” column will be red with a negative number. Even if just one lot is in the red, you have a tax loss harvesting opportunity.
- For the funds you identified as having lots with losses, you must check whether you have a potential wash sale from purchasing the fund within the last 30 days. For background on wash sales, see Part 1 of the tax loss harvesting guide. To do this, check the purchase history (using the same buttons as in step 2) for any substantially identical funds in both your regular taxable brokerage and your IRA accounts for both you and your spouse. If you have made a purchase in the last 30 days, you should likely wait to tax loss harvest. For alternatives, see the advances tips in Part 3 of the tax loss harvesting guide.
- You have identified lots to sell and verified selling will not trigger a wash sale, so now you can sell the funds. Click the name of the fund you want to sell and click the “Sell” button.
- This will pull up the standard trading window at the top left. This window does not let you specify the specific shares you want to sell, so click “Switch to the expanded Trade Ticket” at the bottom of the window
- Enter the total quantity of shares you want to sell, which should equal the number of shares with losses. Select Order Type of “Market Order” and check the box to “Choose Specific Shares”
- You will now see a table where you specify which shares to sell in the “Shares Specified” column. Enter the number of shares equal to the “Shares Available” for each lot with losses. Verify you see a red number signifying a loss at the bottom-left of your screen. Then click “Preview Order” at the bottom.
- Review your sell order and click “Place Order.” If this is during market hours, your order will execute almost immediately. If this is outside of market hours, your order will execute when the market reopens. Repeat steps 5 through 9 for all funds you are tax loss harvesting.
- After your order executes, you will have additional funds available in your account to purchase your alternative fund. If you are not sure which alternative fund you will be purchasing, see my list of logical alternative funds in Part 2 of the guide.
To execute this purchase, click the “Trade” button at the top left and fill out the details of the fund you are purchasing.
- Account: select your regular taxable brokerage account
- Symbol: the ticker of the alternative fund you are purchasing. You can also search by name, but I recommend using the ticker directly to ensure you’re purchasing the right fund.
- Action: select “Buy” and click the “Calculate Quantity” button to calculate the right number of shares based on the money available in your account. You will see the “Cash Available to Trade” at the top of this window.
- Order type: select “Market Order”
- Click “Preview Order”
- Review your buy order and click “Place Order.” If this is during market hours, your order will execute almost immediately. If this is outside of market hours, your order will execute when the market reopens. Repeat steps 10 and 11 to buy all the alternative funds to replace the ones you sold.
- Congratulations, you just tax loss harvested in your Fidelity account! You now have realized losses for tax purposes without really modifying your portfolio. Be sure to read Part 2 of the tax loss harvesting guide to ensure you avoid a wash sale for the next 30 days.