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Re: Help me understand taxes with non-retirement accounts

DSInvestor wrote:What are they doing for health insurance? If they're buying through the healthcare exchange and want to get a subsidy, they may need to file tax returns.


Given the Social Security and ages, they are presumably on Medicare, not the health insurance exchange.
by grabiner
Fri Dec 19, 2014 11:36 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help me understand taxes with non-retirement accounts
Replies: 29
Views: 2302

Re: Home Mortgage payoff

The real (inflation adjusted) after-tax cost of the mortgage is less than 1%. You know the expected results: it will come out in favor of the investments. The key word here is "expected". You do expect higher returns from stocks than from bonds, but you probably aren't planning to sell al...
by grabiner
Thu Dec 18, 2014 10:58 pm
 
Forum: Personal Finance (Not Investing)
Topic: Home Mortgage payoff
Replies: 21
Views: 2129

Re: State tax deducation & AMT

I still think there may be a glitch in the TT program in the way it runs the calculation. In simple words, if the deduction reduces your tax by more than zero, then tax benefit and refund taxable. That is correct as I understand it, the tax benefit rule for AMT is an all or nothing rule. Bsteiner, ...
by grabiner
Thu Dec 18, 2014 10:40 pm
 
Forum: Personal Finance (Not Investing)
Topic: State tax deducation & AMT
Replies: 26
Views: 2148

Re: Help me understand taxes with non-retirement accounts

I'm pretty sure their SS is between $18K-$22K (not exactly sure) and it looks like there are $6000 worth of dividends from their 1099-DIV, half of which are qualified dividends. $250 in capital gains. Those are the only sources of their only income. This is too little to require them to pay federal...
by grabiner
Wed Dec 17, 2014 11:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help me understand taxes with non-retirement accounts
Replies: 29
Views: 2302

Re: On average, how often do you check your investment balan

I check whenever I need to. If I am about to make a new investment (taxable or Roth IRA), I need to check my balances to decide where to put the money; it goes into the most underweighted available asset class. Also, if the market has dropped, I check occasionally whether I need to tax-loss harvest....
by grabiner
Wed Dec 17, 2014 11:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: On average, how often do you check your investment balances?
Replies: 53
Views: 3214

Re: For you slicers/dicers out there [rebalancing/adding new

I have automatic investments only in my employer plan, which is natural because I invest from every paycheck. Since I hold all my bonds there, I set my contribution in an effort to keep my bond allocation constant. For example, when I held 10% bonds, and half my new investments were in the employer ...
by grabiner
Wed Dec 17, 2014 10:41 pm
 
Forum: Investing - Theory, News & General
Topic: For you slicers/dicers out there [rebalancing/adding new $]
Replies: 20
Views: 1881

Re: Vanguard's stockpickers outperform.... [news article]

Hi: Vanguard's stockpickers outperform despite firm's passive push - Yahoo Finance UK Over the last three years, 20 out of Vanguard's 30 actively managed stock funds outperformed their benchmarks by an average of 1.1 percentage points a year, according to Lipper data For most firms, such performanc...
by grabiner
Wed Dec 17, 2014 10:31 pm
 
Forum: Investing - Theory, News & General
Topic: Vanguard's stockpickers outperform.... [news article]
Replies: 14
Views: 1911

Re: Fund placement across 401(k), Roth IRA, taxable

Just one last question: Is it typically advisable to adjust the 401(k) and taxable balances by 1-marginal tax rate? I do; see Tax-adjusted asset allocation on the wiki. It is a significant effect for me because I have a large Roth IRA, and hold different asset classes in the Roth from those in my o...
by grabiner
Wed Dec 17, 2014 10:15 pm
 
Forum: Investing - Help with Personal Investments
Topic: Fund placement across 401(k), Roth IRA, taxable
Replies: 21
Views: 1677

Re: Vanguard High-Yield Corporate Bond Fund (VWEAX) ?

Anyone have a opinion on how much lower Vanguard High-Yield Corporate Bond Fund (VWEAX) will drop. Its down about 3.5% this year and down about 35 cents from this years high of $6.17. Thanks ! VWEAX is not a growth oriented investment. If you look at its historical price, it is fairly flat. So I wo...
by grabiner
Wed Dec 17, 2014 10:13 pm
 
Forum: Investing - Help with Personal Investments
Topic: Vanguard High-Yield Corporate Bond Fund (VWEAX) ?
Replies: 15
Views: 1467

Re: Help me understand taxes with non-retirement accounts

Thanks for all the quick replies, I REALLY appreciate it. So let me get this straight, every year, they need to pay income taxes on both funds, less with Total Stock Market and more with Total Bond? Only on the amount distributed. If a fund pays a $5000 dividend, they will pay taxes on that $5000 d...
by grabiner
Wed Dec 17, 2014 10:08 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help me understand taxes with non-retirement accounts
Replies: 29
Views: 2302

Re: What is the best strategy for HSA?

The CA tax issue that grabiner brings up is something I don't have expertise on, but my instinct tells me that equity returns probably trump state tax concerns. Your investments are all one portfolio. If you are going to hold TIPS, then holding TIPS in your HSA and stocks in your Roth IRA (or your ...
by grabiner
Wed Dec 17, 2014 9:50 pm
 
Forum: Investing - Help with Personal Investments
Topic: What is the best strategy for HSA?
Replies: 6
Views: 1416

Re: Foreign tax credit if I sell?

I seem to remember some situation where you can end up with only a little foreign sourced income (capital gains on foreign stocks are still US gains), and so the FTC is limited to some similar tax rate to your regular one but on that small foreign income amount. This is the rule. If you pay 10% of ...
by grabiner
Wed Dec 17, 2014 9:48 pm
 
Forum: Investing - Theory, News & General
Topic: Foreign tax credit if I sell?
Replies: 14
Views: 1350

Re: State tax deducation & AMT

Part of the issue is that the terminology is confusing. There are two tax rules, with different tax rates and deductions: the regular rules, and the AMT rules. You compute your tax under the AMT rules to find your Tentative Minimum Tax (TMT). If the TMT is less than the regular tax, you pay the regu...
by grabiner
Wed Dec 17, 2014 12:21 am
 
Forum: Personal Finance (Not Investing)
Topic: State tax deducation & AMT
Replies: 26
Views: 2148

Re: TLH question

I guess I dont understand this. I also did a tax loss exchange from VTIAX to VFWAX on 10/15. If I today switch back, I would avoid the dividend on VFWAX, but I would pick up the non-qualified dividend on VTIAX. What am I missing? How did you keep your dividends qualified? If you hold a fund share f...
by grabiner
Wed Dec 17, 2014 12:14 am
 
Forum: Investing - Help with Personal Investments
Topic: TLH question
Replies: 6
Views: 672

Re: How long should I wait to convert to Roth

Your account balance isn't affected by the timing of the conversion relative to market movements; your Roth IRA balance will be equal to your traditional IRA balance at the time of conversion, whether the market rises or falls before you convert. (Actually, if the market rises, it would hurt you by ...
by grabiner
Wed Dec 17, 2014 12:10 am
 
Forum: Investing - Help with Personal Investments
Topic: How long should I wait to convert to Roth
Replies: 3
Views: 696

Re: Inovative way to maximize company 401K match.

Seems like I was on the same page as many of you. The 401K is a Roth, I forgot to mention that. Is it Roth only, or do you have a traditional option? If you have a traditional option, it's better to use that option when you can't get the full match on the Roth, as this allows you to get a larger ma...
by grabiner
Wed Dec 17, 2014 12:07 am
 
Forum: Investing - Help with Personal Investments
Topic: Inovative way to maximize company 401K match.
Replies: 13
Views: 1733

Re: What is the best strategy for HSA?

Wiki article link: Health Savings Account If you are maxing out your retirement plans, it's better to let the HSA grow tax-deferred and pay medical expenses out of pocket. You would then treat the HSA as if it were part of your IRA; thus, if you choose to hold bonds in your HSA, you can hold fewer b...
by grabiner
Wed Dec 17, 2014 12:04 am
 
Forum: Investing - Help with Personal Investments
Topic: What is the best strategy for HSA?
Replies: 6
Views: 1416

Re: Upcoming distributions and TLH

If the dividend is qualified (holding for 61 days) does it make sense to capture the dividend as long as it is not re-invested and do the TLH the day after to capture a bigger loss? Yes, particularly for an international fund; you get the foreign tax credit as well. Your capital loss will increase ...
by grabiner
Tue Dec 16, 2014 11:56 pm
 
Forum: Investing - Help with Personal Investments
Topic: Upcoming distributions and TLH
Replies: 17
Views: 1304

Re: Foreign tax credit if I sell?

Under some situations, you may not be able to take the FTC, or only take it a little bit each year. There's a deduction available, but it's much worse than a credit (worth 1/3 as much, give or take). This is unlikely if your foreign tax is only from mutual funds. Typically, the foreign tax is about...
by grabiner
Tue Dec 16, 2014 11:48 pm
 
Forum: Investing - Theory, News & General
Topic: Foreign tax credit if I sell?
Replies: 14
Views: 1350

Re: Should I surrender my annuity and whole life policy?

Variable annuities don't get much love on this site, but you have high earning power and a long time horizon. A low cost VA is probably not a bad thing in your situation. It wouldn't be such a bad thing, except that he is not maxing out his 401(k) and IRA yet: I am about to qualify for a pension an...
by grabiner
Tue Dec 16, 2014 1:16 am
 
Forum: Investing - Help with Personal Investments
Topic: Should I surrender my annuity and whole life policy?
Replies: 17
Views: 1238

Re: Dilemma with Turbo Tax & NJ-Lady Geek, Grabiner, others?

I don't know how to make this adjustment in NJ. I lived in NJ but didn't own any Qualified Investment Funds. If you make the correction as suggested, and include a note for your own records, it shouldn't cause a problem. The 1099 that you store with your TurboTax isn't sent to the IRS, so it doesn't...
by grabiner
Tue Dec 16, 2014 12:45 am
 
Forum: Personal Finance (Not Investing)
Topic: Dilemma with Turbo Tax & NJ-Lady Geek, Grabiner, others?
Replies: 1
Views: 508

Re: Pay down mortgage or save for next house

The key is that you will be able to get at that equity when you need it. If you buy another house while waiting to sell the current one, you can take out the equity with a bridge loan or home-equity loan to get your down payment; the rate may be higher than on your current mortgage, but it won't mat...
by grabiner
Tue Dec 16, 2014 12:18 am
 
Forum: Personal Finance (Not Investing)
Topic: Pay down mortgage or save for next house
Replies: 3
Views: 613

Re: Five questions to determine Financial Health

I fail #4. I don't have 10% of my own net worth in safe and liquid assets. I do have more than 10% of my net worth in bonds, but those bonds are all in my retirement accounts; my taxable account is all stock except for a money-market fund, and the money-market fund plus my checking account is nowher...
by grabiner
Tue Dec 16, 2014 12:15 am
 
Forum: Personal Finance (Not Investing)
Topic: Five questions to determine Financial Health
Replies: 7
Views: 969

Re: Foreign tax credit if I sell?

If you are thinking of hanging on just to get the foreign tax credit, don't. Lets assume $51 NAV and a $3 dividend soon. After the dividend, you will have a $48 NAV, $2 in cash, and a $1 tax credit. Still $51. The foreign tax credit is not part of the NAV loss, because it is money the fund has alre...
by grabiner
Mon Dec 15, 2014 11:50 pm
 
Forum: Investing - Theory, News & General
Topic: Foreign tax credit if I sell?
Replies: 14
Views: 1350

Re: Dollar Cost Averaging with commission free ETFs

If you buy an ETF which trades at a large spread, you may have a time cost rather than a dollar cost; you may have to wait half an hour to avoid losing a large spread on your trades. (I have had this happen several times when buying low-volume ETFs, but the half-hour is worthwhile when it saves me $...
by grabiner
Mon Dec 15, 2014 11:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Dollar Cost Averaging with commission free ETFs
Replies: 2
Views: 338

Re: Should I surrender my annuity and whole life policy?

The surrender charge on the annuity is already lost. If you wait for the charge to go away, you'll pay it to the insurance company in higher expenses. If you cash out the annuity, you will owe tax at your regular tax rate, plus a 10% penalty, but only the the gains, not the total amount. (You don't ...
by grabiner
Mon Dec 15, 2014 11:27 pm
 
Forum: Investing - Help with Personal Investments
Topic: Should I surrender my annuity and whole life policy?
Replies: 17
Views: 1238

Re: Debt payoff scheme

What would be a good/quick liquid investment I could do? I was given a personal loan for $20,000 from my parents when I first graduated to help with buying a house. They want the money back in five years and I thought instead of just paying them the chunk of cash I could invest some money now and t...
by grabiner
Sun Dec 14, 2014 8:34 pm
 
Forum: Personal Finance (Not Investing)
Topic: Debt payoff scheme
Replies: 11
Views: 1056

Re: Help with seeing tax consequences, scenios for low incom

I graduated with my BA this summer. I have education expenses, and thus tax credits. I have to read on rules, especially since I had IRA distributions, but if I contribute to an IRA, and I didn't make much, can I get use the Saver's Credit? Not this year; see the Form 8880 instructions . If you are...
by grabiner
Sun Dec 14, 2014 8:22 pm
 
Forum: Personal Finance (Not Investing)
Topic: Help with seeing tax consequences, scenios for low income
Replies: 7
Views: 915

Re: Does AMT affect using harvested loss against regular inc

You may have a different amount of capital gains and losses under AMT (for example, if you exercised an incentive stock option and thus have different regular and AMT basis for the stock), but the rules for the taxable amount are still the same: losses offset gains, up to $3000 of losses offsets reg...
by grabiner
Sun Dec 14, 2014 8:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: Does AMT affect using harvested loss against regular income?
Replies: 1
Views: 248

Re: Medical Necessity and the Insurance Appeals Process

If there was written proof that the insurance company authorized the testing then i would have the patient take his/her case to the state insurance commissioner. Agreed. In this case, the insurance company incorrectly authorized test. That is, they gave pre-approval for a test which was not covered...
by grabiner
Sun Dec 14, 2014 8:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: Medical Necessity and the Insurance Appeals Process
Replies: 15
Views: 1134

Re: Roth IRA is not completely free of tax considerations?

(And the five-year rule applies only to when you opened the Roth. If you opened a Roth IRA in 2009 or earlier and are 59-1/2 now, you can withdraw all your gains tax free, even gains from your 2014 contribution. You would owe a 10% penalty on any taxable conversion from 2010-2014 withdrawn in 2014,...
by grabiner
Sun Dec 14, 2014 7:33 pm
 
Forum: Investing - Help with Personal Investments
Topic: Roth IRA is not completely free of tax considerations?
Replies: 19
Views: 2467

Re: tax exempt muni fund questions

So the accounting would be different than it is for my other taxable account because any capital gains on the bond fund are taxable but the dividends are not? Does Vanguard track this or would I have to keep my own accounting? Your brokerage statement for any fund will have the information for the ...
by grabiner
Sun Dec 14, 2014 7:20 pm
 
Forum: Investing - Help with Personal Investments
Topic: tax exempt muni fund questions
Replies: 13
Views: 1812

Re: Tax loss harvesting total int. etf (vxus)

am wrote:Do you know what the % are for veu and vss?


85% VEU and 15% VSS is a good approximation to the total stock market.
by grabiner
Sat Dec 13, 2014 11:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: Tax loss harvesting total int. etf (vxus)
Replies: 5
Views: 511

Re: Bid-Ask spread

Any other words of wisdom on how to best deal with large spreads when buying/selling? Stay away from ETFs with big spreads. $1 spread on a $24 etf is like a 4.5% sales load. Also, don't use market orders. If anything place a limit order a few cents through the market. Never trade after hours as the...
by grabiner
Sat Dec 13, 2014 11:38 pm
 
Forum: Investing - Help with Personal Investments
Topic: Bid-Ask spread
Replies: 7
Views: 815

Re: Roth IRA is not completely free of tax considerations?

A Roth withdrawal of gains on funds held for less than five year would be a taxable event. Or before age 59-1/2. (And the five-year rule applies only to when you opened the Roth. If you opened a Roth IRA in 2009 or earlier and are 59-1/2 now, you can withdraw all your gains tax free, even gains fro...
by grabiner
Sat Dec 13, 2014 11:34 pm
 
Forum: Investing - Help with Personal Investments
Topic: Roth IRA is not completely free of tax considerations?
Replies: 19
Views: 2467

Re: TD Ameritrade portfolio help

Thank you Grabiner, in my haste I put Total World, forgetting that includes US, duh on my part. I should have put VEU Vanguard FTSE All-World ex-US Index Fund ETF Shares ER 0.15 as the International of the 3 fund I proposed. ( with VTI and BND) VEU is on the commission free trade list. What do you ...
by grabiner
Sat Dec 13, 2014 11:22 pm
 
Forum: Investing - Help with Personal Investments
Topic: TD Ameritrade portfolio help
Replies: 15
Views: 894

Re: Debt payoff scheme

I have a 3% fixed loan that I once told myself I would never pay off early, given the low rate. The other day I considered again buying some EE bonds for the 20-year feature where they double in value, earning an effective PRE-tax 3.5%, which I get ONLY if I wait 20 year. Wait, what? Why wouldn't I...
by grabiner
Sat Dec 13, 2014 2:44 pm
 
Forum: Personal Finance (Not Investing)
Topic: Debt payoff scheme
Replies: 11
Views: 1056

Re: Debt payoff scheme

Welcome to the forum! See the Wiki article: Paying down loans versus investing Paying down your student loans gives you a risk-free return of 5.9%. Investing in a taxable account might give you a higher return, but only if you take a lot of risk; I would expect a 5.9% after-tax return on a portfolio...
by grabiner
Sat Dec 13, 2014 2:37 pm
 
Forum: Personal Finance (Not Investing)
Topic: Debt payoff scheme
Replies: 11
Views: 1056

Re: Car Loan vs Cash Flow

2.09% tax-free and risk-free earned in three years is a very good rate of return, and that's what the OP gets by paying down the car loan. It's equivalent to buying a three-year CD, at much better than the market rate. Yeah but if I had $35k in cash right now, I wouldn't invest it in a 3-year CD. I...
by grabiner
Sat Dec 13, 2014 2:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: Car Loan vs Cash Flow
Replies: 22
Views: 1465

Re: investing advice

Welcome to the forum! In order to give good advice, we need more information about your situation; please follow the format in Asking Portfolio Questions and edit your first post. For example, I would recommend that you put part of your portfolio in the G fund to reduce risk, but I don't have a good...
by grabiner
Sat Dec 13, 2014 12:54 pm
 
Forum: Investing - Help with Personal Investments
Topic: investing advice
Replies: 3
Views: 418

Re: How to convert from TIRA to Roth IRA

Welcome to the forum! Given that starting in 2015, we will have to use backdoor method to contribute to Roth IRA, what are the available options I have for my current TIRA. • For the 2014 tax year, should I convert TIRA to Roth in 2014 or 2015? • How to fill out Form 8606 for the conversion? • Will ...
by grabiner
Sat Dec 13, 2014 12:51 pm
 
Forum: Investing - Help with Personal Investments
Topic: How to convert from TIRA to Roth IRA
Replies: 11
Views: 870

Re: Roth conversion, re-characterization, taxes

This is what I've done in the past. I convert near year-end and re-characterize once all the final numbers are in and before I file my return (by April 15th). I've discovered that Vanguard is not always the best at understanding the rules for re-characterization so if you're using them give yoursel...
by grabiner
Sat Dec 13, 2014 12:45 pm
 
Forum: Investing - Help with Personal Investments
Topic: Roth conversion, re-characterization, taxes
Replies: 12
Views: 612

Re: tax exempt muni fund questions

Our current non-stock allocation is 12% bond/ 28% fixed - which I know is too much fixed earning too little interest. Adding this money to the mix would make it more along the lines of 21% bonds/ 25% fixed. I like the idea of tax exempt income once I am retired and hadn't thought about it along tho...
by grabiner
Sat Dec 13, 2014 12:43 pm
 
Forum: Investing - Help with Personal Investments
Topic: tax exempt muni fund questions
Replies: 13
Views: 1812

Re: year end tax loss harvesting strategy

I will be selling shares BEFORE the dividend is paid. I do not want my AGI to go up by the amount of the dividend. I intend buy the replacement shares after they have paid their dividend, so that I do not receive their dividend as well. But won't the price per share go down after the dividend there...
by grabiner
Sat Dec 13, 2014 12:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: year end tax loss harvesting strategy
Replies: 13
Views: 751

Re: Roth conversion, re-characterization, taxes

Forgive me if this has been discussed but, if so, I'm not finding it. 2014 is my first year of retirement and so I'm not sure what our taxable income will be. I want to convert part of my TIRA into my Roth. I know if I convert too much (resulting in being pushed beyond the 15% tax bracket), then I ...
by grabiner
Sat Dec 13, 2014 12:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Roth conversion, re-characterization, taxes
Replies: 12
Views: 612

Re: TD Ameritrade portfolio help

I am confused about Money Purchase Plans. But, if you have access to TD Ameritrade ETFs you should have access to these funds https://www.tdameritrade.com/investment-products/etfs.page (there are several pages to cover the below funds, this is one) Which includes VTI Vanguard Total Stock Market Ind...
by grabiner
Sat Dec 13, 2014 11:33 am
 
Forum: Investing - Help with Personal Investments
Topic: TD Ameritrade portfolio help
Replies: 15
Views: 894

Re: tax exempt muni fund questions

I would not suggest putting all of it in the NJ fund, but I don't see a problem with putting half of the money there. The state funds tend to be "longer" (higher duration) which makes them more sensitive to interest rates. The state funds also concentrate risk in one state. So I would not...
by grabiner
Sat Dec 13, 2014 11:21 am
 
Forum: Investing - Help with Personal Investments
Topic: tax exempt muni fund questions
Replies: 13
Views: 1812

Re: Umbrella Liability Insurance - Need it or not?

I purchased a $1M umbrella from USAA for about $22/mo. The problem with most limits these days, they haven't been indexed to inflation. Best to check out your limits. You need to index liability limits to more than just inflation anyway. As your net worth increases, you have more at risk, and thus ...
by grabiner
Fri Dec 12, 2014 9:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: Umbrella Liability Insurance - Need it or not?
Replies: 49
Views: 4479

Re: Where to place International REIT?

International REIT funds have about a 4% foreign tax credit loss. For VNQI, it was 4.5% last year. With a 4.29% yield, that would reduce the tax cost by 18 basis points. With a high yield which is mostly non-qualified (only 18% qualified last year), VNQI is still very tax-inefficient, so it should b...
by grabiner
Fri Dec 12, 2014 8:30 pm
 
Forum: Investing - Help with Personal Investments
Topic: Where to place International REIT?
Replies: 9
Views: 943

Re: Car Loan vs Cash Flow

I'd keep the car loan as long as possible. 2.09% is cheap money. I strongly disagree with the point made above that borrowing for a house is different than borrowing for a car because home loans "build value." Money is fungible. Now, I would strongly advise that you really can't afford a ...
by grabiner
Fri Dec 12, 2014 8:15 pm
 
Forum: Personal Finance (Not Investing)
Topic: Car Loan vs Cash Flow
Replies: 22
Views: 1465
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