This post is for knowledge sharing only. It is not intended to be tax or investment advice. 1. Contribute to pre-tax 401K and HSA As well known, pre-tax 401K and health saving account (HSA) are the only a few tax shelters for W2 workers. 2. Tax-loss harvesting If your total capital losses exceed your capital gains in a tax year, you can deduct up to \$3,000 (married filing jointly) from your ordinary income. If your losses are more than $3,000, you can carry over the remaining amount to future years, continuing to offset your income until all the losses are used up. A popular method to generate these deductible losses is tax-loss harvesting . This involves selling a security at a loss to offset gains or reduce ordinary income, and optionally purchasing a similar, but not "substantially identical", security to avoid missing out on the market. However, be aware of the wash-sale rule , which disallows claiming a loss if you buy the same or a substantially identical security
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