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Taxes

Minimum tax method

MinTax is a form of a the "specific identification" cost basis method, which attempts to minimize the income tax you'll owe for the current year. It's available for mutual funds, ETFs (exchange-traded funds), and stocks.
4 minute read

How it works

Our system prioritizes your tax savings by strategically selecting to sell or transfer securities in the order listed below:

  1. Short-term capital loss from largest to smallest.
  2. Long-term capital loss from largest to smallest.
  3. Short-term zero gain or loss.
  4. Long-term zero gain or loss.
  5. Long-term capital gain from smallest to largest.
  6. Short-term capital gain from the smallest to largest.

Each category is exhausted before moving to the next. If the cost of the original share is unknown, we'll treat the cost basis as zero.

Why you might prefer the MinTax method

It's easy to use

The MinTax method automatically chooses which shares to sell.
 

Its redemption method helps deliver tax savings

The order it sells and transfers securities attempts to produce favorable tax rates by prioritizing short-term losses over long-term losses, then long-term gains over short-term gains.

A few things to consider

Some strategies may not benefit from this method

MinTax chooses the highest priced shares first, which may not produce a desirable tax outcome when gifting or transferring securities.
 

Sales involve a mix of covered and non-covered shares

Our systems evaluate each lot by its cost per share rather than its covered or non-covered status.
 

Other factors to consider

The MinTax cost basis method can minimize the tax impact of a transaction in many (but not all) cases. Your tax impact will vary based on the transaction, your tax bracket, or other circumstances. We recommend you contact a tax advisor to see if this cost basis method is right for you.

Our systems evaluate each lot by its cost per share rather than its covered or non-covered status.

We recommend that you consult a tax or financial advisor about your individual situation.

Select a cost basis method

Select a cost basis method

We recommend that you consult a tax or financial advisor about your individual situation.