M1 does not offer tax loss harvesting.
Tax loss harvesting is when an investor sells securities at a loss to counteract a liability. This strategy is sometimes used to reduce the recognition of short-term capital gains.
When you initiate a withdrawal for an amount greater than your cash available for withdrawal or place a manual sell order of your whole portfolio, our algorithm will identify the most overweight Slices in your Pie first, and sell out of those to bring them closer to their target allocations.
From these identified Slices, tax lots are sold based on our tax minimization strategy which aims to help clients reduce the amount of taxes owed when selling securities. This is accomplished by selling tax lots in the order of lowest to highest tax burden.
Manual sell orders placed on specific Slices will follow the same tax minimization strategy regarding tax lots.
Here is the list from lowest to highest tax burden:
Short-term capital loss, from the biggest loss to the smallest.
Long-term capital loss, from the biggest loss to the smallest.
Short-term zero gain/loss.
Long-term zero gain/loss.
Long-term capital gains, from the smallest gain to the biggest.
Short-term capital gains, from the smallest gain to the biggest.
Please note: Crypto Accounts use FIFO method (first in, first out). With this, the earliest currency purchased will be the first sold. You are unable to use FIFO or LIFO for the rest of your investment accounts.
M1 and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. It is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
Brokerage accounts on the M1 platform are either fully disclosed to APEX Clearing or cleared through M1 Finance LLC. Please look at your account statement to determine how your account is cleared.
All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future performance. Using margin can add to these risks. Users utilizing APEX cleared margin accounts should review the APEX margin account risk disclosure before borrowing. Users utilizing M1 cleared margin accounts should review the M1 margin account risk disclosure before borrowing. M1 Margin Loans are available on margin accounts with at least $2,000 invested per account. Not available for Retirement or Custodial accounts. Margin rates may vary.
Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC, and a wholly owned subsidiary of M1 Holdings, Inc.
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