some questions... [reporting fund sale/purchase, taxes]

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some questions... [reporting fund sale/purchase, taxes]

Postby seafood10 » Fri Feb 01, 2013 11:51 am

i purchased 2 vanguard funds on my scottrade taxable account on april 28, 2012. the dividends are automatically set to reinvest for both funds. i sold all of my funds on jan. 25th, 2013 and used all the money i cashed out to purchase another vanguard fund on jan. 28th, 2013. i'm on the 28% tax bracket and my portfolio grew about $2400. here are my questions...

1. do i need to report this to the irs on my 2012 or 2013 tax return?

2. do i pay 15% or 28% for my capital and explain why?

3. even if i didn't cash out and since my dividends are automatically reinvested on my taxable scottrade account. do i still need to report it to the irs each year if i had any capital gain or lost? or only i need to report it if i cash it all out for that tax year? what about if i only cash out partial of it, how does that work?

thx in advance.
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Re: some questions... [reporting fund sale/purchase, taxes]

Postby seafood10 » Fri Feb 01, 2013 12:46 pm

4. when i used all my money and purchased another fund on jan. 28th. how long do i need to wait before i can sell it again? what is the earliest that i can sell for most vanguard fund?
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Re: some questions... [reporting fund sale/purchase, taxes]

Postby BL » Fri Feb 01, 2013 1:28 pm

seafood10 wrote:i purchased 2 vanguard funds on my scottrade taxable account on april 28, 2012. the dividends are automatically set to reinvest for both funds. i sold all of my funds on jan. 25th, 2013 and used all the money i cashed out to purchase another vanguard fund on jan. 28th, 2013. i'm on the 28% tax bracket and my portfolio grew about $2400. here are my questions...

1. do i need to report this to the irs on my 2012 or 2013 tax return?
You should get a 1099-B from your broker for sales in 2012.

2. do i pay 15% or 28% for my capital and explain why?
Since you held them less than a year, it is all short-term gains, so rate is whatever your tax bracket is.

3. even if i didn't cash out and since my dividends are automatically reinvested on my taxable scottrade account. do i still need to report it to the irs each year if i had any capital gain or lost? or only i need to report it if i cash it all out for that tax year? what about if i only cash out partial of it, how does that work?

thx in advance.
You should get a 1099-Div from your broker reporting dividends and realized capital gains on funds you own in taxable accounts. It has nothing to do with whether you reinvested them or not. Sales will be reported to you on 1099-B with short and long-term capital gains. On sales, any money gained or lost if purchased or reinvested less than year ago would be short-term, over a year is long-term.



There may be a few Vanguard funds that have frequest trading rules restricting sales for a few months.
If you are planning to move in and out frequently, you should probably be in ETFs rather than mutual funds.
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Re: some questions... [reporting fund sale/purchase, taxes]

Postby seafood10 » Fri Feb 01, 2013 1:50 pm

let me be clear. i didn't make any sell for 2012. so the dividends that i earn on 2012 which automatically get reinvested, i have to report it to the irs no matter what? does it matter if i held my fund or sold all of my fund? so my $2400 dividends that i earn from 2012, i have to report it to irs? are there short and long term for capital gain on dividends?
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Re: some questions... [reporting fund sale/purchase, taxes]

Postby Savvy » Fri Feb 01, 2013 2:12 pm

I believe you will declare dividends that you received in 2012 but will not need to declare sales, since the sales occurred in 2013.

Full disclosure: I am 23 (not experienced) but did just file taxes and reported on dividends and stock sales for 2012.
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Re: some questions... [reporting fund sale/purchase, taxes]

Postby BL » Fri Feb 01, 2013 2:19 pm

[quote="seafood10"]let me be clear. i didn't make any sell for 2012. so the dividends that i earn on 2012 which automatically get reinvested, i have to report it to the irs no matter what? does it matter if i held my fund or sold all of my fund? so my $2400 dividends that i earn from 2012, i have to report it to irs? are there short and long term for capital gain on dividends?[/quote


You will pay tax for 2012 for dividends and realized capital gains which will be reported to you shortly in a 1099-Div.

You sold in 2013 so next year you will get the 1099-B for this sale.

If you had not reinvested dividends and realized capital gains:
You would owe short-term (because you held it less than a year) capital gains on the difference between your purchase price and selling price (there could be some fees involved also).

If you reinvested, there will be more purchases to raise the purchase price and thus lower your (capital gain) profit. (You don't get dividends from sales.)

If you had purchased more than a year ago, you would have long-term gains on that part of the sale, and short-term on reinvestments less than a year old.

If you sold partially, you would have capital gains (or losses) on the number of shares sold and would report that for the year in which it occurred.
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