M1 does not do 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.
However, all M1 Invest Accounts use our tax minimization feature which aims to help clients reduce the amount of taxes owed when selling securities. This is accomplished by selling securities in the order of lowest tax burden to highest.
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.
If you have further questions, please contact us.