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Will I have to pay taxes on money withdrawn from Wealthfront?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

Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.

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