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Will I have to pay taxes on money withdrawn from Wealthfront?

To satisfy your withdrawal request we will typically have to sell some of your Wealthfront investments. If those investments are sold at a gain then they will typically generate a tax liability.

However, when you withdraw money from an account at Wealthfront we work very hard to minimize the current tax liability on your gains. We do this by carefully choosing which lots among your Wealthfront investments we sell to satisfy your withdrawal. In particular, we’ll try to sell lots with losses first (since they generate no tax liability) followed by lots with only a small tax liability (typically those taxed at the lower long-term capital gains rate) and only then followed by lots with significant tax liability.

As a result, you’ll likely only generate an insignificant tax liability when withdrawing a small amount of money.

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Wealthfront prepared this article for informational purposes and not as an offer, recommendation, or solicitation to buy or sell any security. Wealthfront and its affiliates may rely on information from various sources we believe to be reliable (including clients and other third parties), but cannot guarantee its accuracy or completeness. See our Full Disclosure for more important information.

Wealthfront and its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisor. Financial advisory and planning services are only provided to investors who become clients by way of a written agreement. All investing involves risk, including the possible loss of money you invest. Past performance does not guarantee future performance.