Note: The Tax Optimization dashboard is currently not available to users that are using PFU/France, ACB/Canada, or FIFO/Ireland as their cost-basis method.
Introduction
This dashboard is a tool to assist in identifying assets that can be sold at a loss to reduce your total capital gains, or it can be used to identify profitable assets in order to decrease your total capital losses for the year. You can learn more about Tax Loss Harvesting in our guide here.
The Tax Optimization dashboard can be found as a separate tab within the primary dashboard.
Tax Optimization Dashboard Overview
Realized and Potential Gains Overview
These cards give you an overview of your gains and losses:
Realized Capital Gains: Shows your capital gains and losses from assets you’ve sold this tax year, split between short-term and long-term (only for countries that track short/long-term assets separately)
Post-Harvest Gains: Gives an updated overview of your gains if you were to sell some of your holdings. It updates in real-time as you work with the Asset Table.
Asset Table Overview
The Asset Table is where you get into the details and plan your next moves:
Asset Information: Lists each asset you own, including the amount and its current market value. You can experiment with updating the market rate for an asset, to see how that would impact the potential gains.
Gains Analysis: Breaks down your potential gains or losses into short-term and long-term, if your country tracks short/long-term assets separately.
Selective Preview: The checkboxes let you play out 'what-if' scenarios. Tick a box, and the dashboard shows you the updated potential gains or losses, as if you’ve sold that asset.
Filtering Options
Customize your view with these filters:
Assets with Unknown Price: Show or hide assets without a current market rate.
Assets with Positive Gains: Show or hide assets that are currently profitable in the long- and short term, and may not be suitable for tax loss harvesting.
Using these features, you can make more informed decisions to help lower your tax liability in a way that makes sense for your situation.
Practical Example of Using the Tax Optimization Dashboard
Let's say you've been holding both Bitcoin and Ethereum for less than a year. Bitcoin has increased in value since you bought it, while Ethereum has seen a decrease. With the end of the tax year approaching, you decide to review your portfolio on the Tax Optimization Dashboard.
1. Realized Capital Gains: You notice that you have some realized short-term gains from earlier in the year from selling other assets.
2. Asset Table: Here, you see your holdings in Bitcoin and Ethereum. Bitcoin shows a substantial unrealized gain, while Ethereum is at a loss (note that we have selected the option to include assets with positive gains).
3. Strategic Selection: To balance your realized gains and reduce your overall tax liability, you consider selling some Ethereum. You select the checkbox next to Ethereum in the Asset Table. The Post-Harvest Gains section updates to reflect the loss from Ethereum against your realized gains.
4. Reviewing the Impact: After selecting Ethereum, you see that the potential loss from selling it could offset some of your realized gains, which may lower your tax bill.
In this scenario, by using the Tax Optimization Dashboard, you've been able to make a strategic decision that might lead to a more favorable tax situation if you were to actually execute the sale of your ETH.
It's important to remember that the actual tax impact can vary based on individual circumstances, and consulting with a tax professional is always recommended.