This post provides instructions for setting up a Vanguard brokerage account to best prepare for tax loss harvesting. 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
Vanguard Account Preparation
1. Click on “My Accounts” at the top left of your screen, then click “Cost Basis.”
2. On the right side, click “View/Change cost basis method.”
3. You will now see a list of your accounts and funds with the cost basis method for each. Use the dropdowns on the right to select “Specific Identification (SpecID)” and hit “Continue.” On the next page, hit “Submit.”
4. Once you have successfully updated your cost basis for all funds, click “My Accounts” at the top-left of your screen, then click “Dividends and Capital Gains.”
5. Click “Change distribution elections” at the top-right of your screen
6. Under each account, you will have a link to “Change elections.” Click that link.
7. You will see two dropdowns: one for Dividends and one for Capital Gains. Set these both to “Transfer to settlement fund.” Hit the “Check all” button to ensure that this change applies to all your funds in the account, then click “Continue.” On the next page, click “Submit.” Do this for all your accounts.