Tax-loss harvesting is the practice of selling investments at a loss to offset capital gains from other investments, reducing your overall tax liability. The harvested losses first offset capital gains dollar-for-dollar. If losses exceed gains, up to $3,000 of excess losses can offset ordinary income per year. Remaining losses carry forward indefinitely to future years.

The wash-sale rule disallows a loss deduction if you buy the same or "substantially identical" security within 30 days before or after the sale. To avoid triggering the rule, you can immediately reinvest in a similar but not identical security (e.g., sell a Vanguard S&P 500 ETF and buy a Fidelity S&P 500 ETF), wait 31 days before repurchasing, or use the loss to rebalance your portfolio.

No — losses in tax-deferred accounts (IRA, 401(k)) cannot be harvested because all gains and losses inside those accounts are tax-deferred. Tax-loss harvesting only applies to taxable brokerage accounts. This is one reason why it can be beneficial to hold more volatile assets in taxable accounts where losses can be harvested.

Yes — and cryptocurrency has a significant advantage: the wash-sale rule does not currently apply to crypto (it applies only to "securities" under the tax code, and crypto is classified as property). This means you can sell crypto at a loss, immediately repurchase the same coin, and still claim the loss deduction. This may change with future legislation.

Capital losses first offset capital gains of the same type (short-term losses offset short-term gains; long-term losses offset long-term gains). Excess losses can offset gains of the other type. After offsetting all capital gains, up to $3,000 of net capital losses can offset ordinary income per year. Remaining losses carry forward indefinitely.

The Child Tax Credit is $2,000 per qualifying child under age 17 in 2026, permanently extended under the OBBBA. Up to $1,700 of the credit is refundable (the Additional Child Tax Credit) for taxpayers with earned income above $2,500. The credit begins to phase out at $200,000 AGI for single filers and $400,000 for married filing jointly, reducing by $50 for every $1,000 of income above the threshold.

The child must be under age 17 at the end of the tax year, a U.S. citizen or resident, claimed as your dependent, and have lived with you for more than half the year. The child must also have a valid Social Security number. There is no limit on the number of qualifying children you can claim.

Yes — up to $1,700 of the $2,000 credit is refundable as the Additional Child Tax Credit (ACTC). If your tax liability is less than the credit amount, you can receive the refundable portion as a cash refund. The refundable amount is calculated as 15% of earned income above $2,500, up to the $1,700 limit per child.

The credit phases out by $50 for every $1,000 (or fraction thereof) of AGI above $200,000 (single) or $400,000 (MFJ). At $440,000 MFJ, the credit is fully phased out for two children. Reducing AGI through retirement contributions, HSA contributions, or business deductions can preserve or increase the credit.

Yes — these are two separate credits. The Child Tax Credit ($2,000/child) is based on having a qualifying child under 17. The Child and Dependent Care Credit (up to $1,050 for one child, $2,100 for two or more) is based on childcare expenses paid so you can work. Both can be claimed in the same year for the same child.

Yes. You can donate long-term appreciated stock (held more than 1 year) directly to a qualified charity or Donor-Advised Fund and deduct the full fair market value on the date of the gift — up to 30% of AGI. You also avoid paying capital gains tax on the appreciation. This is almost always more tax-efficient than selling the stock and donating cash.

When you donate appreciated stock, you get two tax benefits: (1) a charitable deduction for the full fair market value, and (2) you avoid capital gains tax on the appreciation. When you donate cash, you only get the charitable deduction. For stock with large embedded gains, the difference can be tens of thousands of dollars.

You can donate publicly traded stocks, mutual funds, ETFs, bonds, real estate, private company stock, cryptocurrency, and other appreciated assets. The deduction rules vary by asset type: publicly traded securities are deductible at fair market value; private company stock and real estate require a qualified appraisal; cryptocurrency is treated like property.

Contributions of long-term appreciated capital gain property to public charities are deductible up to 30% of AGI. Contributions to private foundations are limited to 20% of AGI. Excess contributions carry forward for up to 5 years. Cash donations to public charities are deductible up to 60% of AGI.

Yes. The IRS treats cryptocurrency as property, so donating appreciated crypto directly to a qualified charity or DAF allows you to deduct the fair market value and avoid capital gains tax on the appreciation — the same as donating appreciated stock. The charity or DAF can then sell the crypto tax-free.

A Dependent Care FSA (DCFSA) is an employer-sponsored benefit that lets you set aside pre-tax dollars to pay for qualifying dependent care expenses. The annual contribution limit is $5,000 per household ($2,500 if married filing separately). Contributions reduce your taxable income for federal income tax, Social Security tax, and Medicare tax — making the effective savings 22-37% depending on your tax bracket.

Qualifying expenses include daycare, preschool, after-school programs, summer day camps, and in-home care (nanny or au pair) for children under age 13. Care for a spouse or dependent who is physically or mentally incapable of self-care also qualifies. Overnight camps, tutoring, and kindergarten tuition do not qualify.

Yes, but not on the same expenses. The $5,000 FSA contribution reduces the expense base available for the Child and Dependent Care Credit. If you have one child, the credit base is $3,000 — after the $5,000 FSA, there is no remaining base for the credit. With two or more children, the credit base is $6,000 — after the $5,000 FSA, $1,000 remains eligible for the credit.

Dependent Care FSAs are "use it or lose it" — unused funds at the end of the plan year are forfeited. Unlike Health FSAs, there is no $640 rollover option. Some employers offer a 2.5-month grace period. Carefully estimate your annual childcare costs before electing your contribution amount.

Yes — payments to a nanny, au pair, or in-home caregiver for a qualifying dependent qualify for the Dependent Care FSA. However, you must report the caregiver's Social Security number on your tax return, and if you pay a household employee more than $2,800/year (2026), you may have "nanny tax" obligations (employer FICA, unemployment insurance).

A 529 plan is a tax-advantaged savings account designed for education expenses. Contributions are made with after-tax dollars (no federal deduction), but the account grows tax-free and qualified withdrawals for education expenses are completely tax-free. More than 30 states offer a state income tax deduction or credit for contributions to their state's 529 plan.

Qualified expenses include tuition, fees, books, supplies, and room and board at accredited colleges and universities. K-12 tuition (up to $10,000/year) also qualifies. Apprenticeship programs and student loan repayment (up to $10,000 lifetime per beneficiary) are also qualified uses. Non-qualified withdrawals are subject to income tax plus a 10% penalty on the earnings portion.

Yes — you can change the beneficiary to another member of the original beneficiary's family (siblings, parents, cousins, etc.) without tax consequences. If your child receives a scholarship or decides not to attend college, you can roll the funds to another family member's 529, use them for K-12 tuition, or roll up to $35,000 into a Roth IRA (subject to annual Roth contribution limits and a 15-year account seasoning requirement).

You can elect to treat a lump-sum 529 contribution as if it were made ratably over 5 years, allowing you to contribute up to $90,000 per beneficiary ($180,000 for married couples) in a single year without gift tax consequences. This is called the "superfunding" or "5-year election" and must be reported on Form 709. No additional gifts to the same beneficiary can be made during the 5-year period without gift tax implications.

Yes — 529 funds can be used for graduate and professional school (law school, medical school, MBA programs) at accredited institutions, just like undergraduate education. Tuition, fees, books, and room and board all qualify. There is no age limit on the beneficiary, so 529 plans can be used for adult education and career changes as well.

Yes — if your children perform genuine, documented work for your business, you can pay them a reasonable wage and deduct it as a business expense. The work must be real (not fabricated), the compensation must be reasonable for the work performed, and you must follow proper payroll procedures. Children as young as 7 or 8 can perform legitimate tasks like filing, cleaning, modeling for product photos, or helping with social media.

It depends on the business structure. For a sole proprietorship or single-member LLC (disregarded entity), wages paid to children under 18 are exempt from Social Security and Medicare taxes (FICA) and federal unemployment tax (FUTA). For an S-Corp or C-Corp, wages paid to children are subject to FICA taxes regardless of age. This FICA exemption is a significant advantage of operating as a sole proprietorship or partnership when employing children.

In 2026, the standard deduction for a single filer is $15,750. If your child's total earned income is below $15,750, they owe zero federal income tax. Wages from your business count as earned income. Paying each child up to $15,750/year maximizes the deduction for your business while generating zero tax for the child. Income above $15,750 is taxed at the child's rate (typically 10-12%), which is still much lower than your rate.

Yes — children can contribute to a Roth IRA as long as they have earned income. The contribution limit is the lesser of $7,500 (2026) or their total earned income. A child who earns $7,500 working in your business can contribute the full $7,500 to a Roth IRA, where it grows completely tax-free for decades. Starting Roth IRA contributions at age 14 instead of 25 can result in hundreds of thousands of dollars more at retirement due to compounding.

You need: (1) a written job description with specific duties, (2) time records or work logs showing hours worked and tasks completed, (3) payment records (checks or bank transfers — never cash), (4) W-2 issuance at year-end, and (5) evidence that the compensation is reasonable for the work performed. The IRS scrutinizes family employment arrangements, so documentation is critical. Keep records as if you were hiring an unrelated employee.

A Donor-Advised Fund (DAF) is a charitable giving account sponsored by a public charity (such as Fidelity Charitable or Schwab Charitable). You contribute cash, securities, or other assets to the DAF, receive an immediate tax deduction for the full contribution, and then recommend grants to qualified charities over time. The assets grow tax-free inside the DAF until distributed.

Cash contributions to a DAF are deductible up to 60% of AGI. Contributions of appreciated securities are deductible at fair market value up to 30% of AGI. Excess contributions carry forward for up to 5 years. Unlike private foundations, DAFs have no minimum distribution requirement.

Bunching means contributing multiple years of planned charitable giving into a DAF in a single year to exceed the standard deduction threshold and itemize. For example, instead of donating $10,000/year for 5 years (which may not exceed the standard deduction), you contribute $50,000 in Year 1 to a DAF, take the full itemized deduction, and then distribute $10,000/year to charities from the DAF over the following 5 years.

Yes — and this is one of the most powerful aspects of a DAF. You can contribute long-term appreciated stock directly to the DAF, deduct the full fair market value (up to 30% of AGI), and avoid paying capital gains tax on the appreciation. The DAF can then sell the stock tax-free and invest the proceeds for future charitable distributions.

A DAF is simpler and cheaper to establish (no legal fees, no IRS approval), has no minimum distribution requirement, offers higher deduction limits, and provides anonymity for grants. A private foundation offers more control (you can hire family members, make program-related investments, and set your own grant criteria) but requires 5% annual distributions, has lower deduction limits, and faces excise taxes on investment income.

When you inherit an asset, your cost basis is "stepped up" to the fair market value on the date of the decedent's death (or an alternate valuation date 6 months later). This means all appreciation during the decedent's lifetime is permanently erased for capital gains purposes. If you sell the asset immediately after inheriting it, you owe zero capital gains tax on the lifetime appreciation.

Most capital assets that pass through an estate receive a step-up: stocks, bonds, mutual funds, real estate, business interests, and collectibles. Assets held in IRAs and 401(k)s do not receive a step-up — they are subject to ordinary income tax when withdrawn. Assets in irrevocable trusts may or may not receive a step-up depending on how the trust is structured.

In community property states (California, Texas, Arizona, Nevada, Washington, Idaho, Louisiana, New Mexico, Wisconsin), both halves of community property receive a step-up in basis when one spouse dies — not just the deceased spouse's half. This is a significant advantage over common law states, where only the deceased spouse's share receives the step-up.

For very large embedded gains, holding appreciated assets until death can eliminate the capital gains tax entirely through the step-up in basis. However, this strategy must be weighed against estate tax exposure (if the estate exceeds the exemption), liquidity needs, and the opportunity cost of holding a concentrated position. Uncle Kam can model the tradeoffs for your specific situation.

Yes — donating appreciated assets to a qualified charity or Donor-Advised Fund eliminates the capital gains tax and generates a charitable deduction for the full fair market value. This is often more tax-efficient than holding until death (which avoids capital gains but may trigger estate tax) or selling and donating cash (which triggers capital gains before the donation).