Widow’s Tax | Crypto Wash Sale

WORTH PONDERING: “Room for error—often called margin of safety—is one of the most underappreciated forces in finance. It comes in many forms: A frugal budget, flexible thinking, and a loose timeline.”

-Morgan Housel, The Psychology of Money

WIDOW’S TAX: When one spouse dies, the surviving partner faces not only grief but also a hidden financial hit: the “widow’s tax.” It is not an actual tax, but it is the higher taxes and costs that come from losing joint filing status. A cruel irony because many surviving spouses pay more in taxes even though their household income just dropped because their filing status switches from Married Filing Jointly to Single. Use the “Widow’s Window”—the year of death is the last year to file jointly. It is often the best time to do Roth conversions, IRA withdrawals, or realize capital gains while brackets are still favorable. Again, our team can help.

HSA & MEDICARE: Just a friendly reminder to stop contributing to your HSA at least 6 months before your Medicare start date. Per Medicare rules on retroactive coverage.

TAX PLANNING WITH YOUR CRYPTO: Unlike stocks, cryptocurrency losses are not subject to wash sale rules under current IRS regulations, meaning you can sell at a loss and immediately repurchase the same asset while still claiming the tax deduction. With the recent crypto drawdown, this presents a strategic opportunity to harvest losses before year-end to offset capital gains or up to $3,000 of ordinary income. Coordinate with your CPA before December 31st to develop a tax-loss harvesting strategy tailored to your specific situation and ensure compliance with all current regulations.

GLOBAL PERSPECTIVE: The U.S. is one of the least top-heavy countries in the world.

TAX STRATEGY—BUNCHING: Bunching is a tax strategy where you consolidate multiple years’ worth of charitable donations or other itemized deductions into a single tax year. It’s very effective when combined with a donor-advised fund and gifting appreciated securities. Here’s a helpful illustration:

NOW GO TALK ABOUT IT: When will stocks peak this year? Is history on our side? Are the highs already in?

*The views expressed represent the opinions of Compass Ion Advisors, LLC, as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, an investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial, or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website here. Past performance is not a guarantee of future results.