Bogleheads.org

I don't usually go to Starbucks, but last week was travelling for work and my colleague and I went to the SB's for quick breakfast before work. We both ordered hot breakfast sandwiches and drinks, so I tipped $2 each day. I would not have tipped if it was just a standard issue coffee.

Target date funds are not inherently tax efficient due to the rebalancing that occurs automatically within the fund. They also often throw off significant dividend/interest income depending on their allocations.

There is also this, but this was (hopefully) a one-time issue:

https://www.cnbc.com/2022/03/15/vanguar ... laims.html

Was it a direct transfer from broker to broker? If so, no 1099-SA would be issued. A 1099-R would not be issued for an HSA.

We've purchased a fridge and dishwasher from HD. Be aware if there are any issues with your hookups not meeting their requirements, the installers will not make an attempt to install. Our dishwasher plumbing hookup apparently didn't meet their requirements and they left the dishwasher with us and left. The previous homeonwer apparently jury-rigged a hookup for the previous dishwasher and it wasn't to the installers liking. HD refunded the install fee we had paid at the time of purchase and we ended up fixing the plumbing issue and installing it ourselves. The fridge install went fine. We have an induction stove install scheduled for Thursday on a HD purchase. Should be a quick swap out since we already have an electric stove and the require...

It will be flagged when the IRS electronically document matches your return (assuming you efiled). I would wait until you get the notice from them and pay it at that point. For that very small amount of interest, filing an amended return just invites confusion and mistakes at the IRS. Just my opinion.

bradinsky wrote: ↑Thu Feb 23, 2023 4:53 am With professional sports accepting the increased accessibility to gambling & prominent retired sports figures aligning themselves with betting sites, I expect gambling addiction to become more of an issue in this country than crack cocaine.

As a recovering problem gambler (it has been several years but one is never truly recovered) and has someone who has read a lot about the psychology and science of gambling addiction, the growth of sports betting worries me for many reasons, particularly the focus on reeling in college age and young adults. I wholeheartedly agree with your post.

Posts like this have no place on Bogleheads.

I track my expenses meticulously in Quicken. It comes with a set of pre-defined categories and I tweaked it a little for my own purposes. One thing I don't do, however, is to try and break down the routine, weekly purchases I make at Walmart, Target, Grocery Stores, etc. into their smaller categories. I just have a Walmart Sub-Category, a Target Sub-Category, etc. under the primary "Household Expenses" category. If I go into Target and buy just a TV, then yes, that would be put into the "Electronics" category. That simplifies things a lot. I do 99.9% of my spending on credit card and Quicken downloads them nicely. After setting it up initially, it generally remembers and pre-assigns the transactions to the proper catego...

96% stock index funds
4% Vanguard settlement MMF

JazzTime wrote: ↑Wed Feb 22, 2023 8:00 am Perhaps I should clarify my question. What I'm really trying to find out is if there are any special credits (covid or otherwise) applicable to children in 2022 as there were in 2021. In 2021 the spouse with low income could qualify for such credits. Hence, the reason T2 claimed the child that year.

Nothing in 2022...the child tax credit returned to the normal $2,000 per child and there was no stimulus in 2022.

dred pirate wrote: ↑Tue Feb 21, 2023 5:43 pm

rob wrote: ↑Tue Feb 21, 2023 5:37 pm Is it the same time or same tax year?

same tax time and tax year - I just did a little googling and am learning something new.
I am familiar with limited purpose FSA's - if I use hers just for those items, would that be compatible?

No, it must specifically be a limited purpose FSA. Limiting your use of a medical FSA to only vision and dental doesn't qualify if it still covers medical.

brainstem wrote: ↑Tue Feb 21, 2023 4:45 pm you can make deposits into an inherited IRA .....

Can or can't?

Just take the cash and deposit it. The bank will have to file a currency transaction report, so if they ask just tell them it was gifts from grandparents.

Don't try to make smaller deposits to avoid the CTR filing...that's called structuring and is illegal.

I'm by no means an expert in NYS taxation, but I assume you are using tax computation worksheet 4. What blows my mind about the form is the following: 1. Enter your New York adjusted gross income from line 33 1. ______________ 2. Enter your taxable income from line 38 2. ______________ 3. Enter your New York State tax on the line 2 amount from the New York State tax rate schedule 3. ______________ 4. Recapture Base amount 4. ____3,016_____ 5. Incremental Benefit amount 5. ___60,349_____ 6. Enter the excess of line 1 over $2,155,350 6. ______________ 7. Enter the lesser of line 6 or $50,000 7. ______________ 8. Divide line 7 by $50,000 and round the result to the fourth decimal place 8. ______________ 9. Multiply line 5 by line 8 9. ________...

A440 wrote: ↑Fri Feb 17, 2023 5:07 pm

DIFAR31 wrote: ↑Fri Feb 17, 2023 4:00 pm By "earnings," do you mean earned income? If so, based only on the facts you present, it looks like your son's standard deduction is $2,900, leaving taxable income of $1,074. This would indicate tax is owed and a return should be filed.

The total taxable income is $1088, but the tax on line 16 is "0" according to Turbo Tax. Not sure why.

Long term cap gains and qualified dividends being taxed at 0%?

What version? I use deluxe download and I can print and review.

.05% is $50 per year on every $100,000 of investment. It’s up to you to determine what convenience is worth. If you have $50k it costs $25 per year. If you have $2,000,000, it costs $1,000 per year.

On another note, the difference between S&P 500 and TSM return over time has been negligible, so just investing in the 500 fund is likely sufficient in the long term.

bikechuck wrote: ↑Wed Feb 15, 2023 10:57 am
Remember to check state taxes as well. In Ohio, when my wife and I were working, we saved hundreds of dollars in state taxes each year filing separately and over 25 years it added up to over $10K in savings. There was never much difference on our federal taxes either way. Each year I just ran them both ways through Turbo Tax or H &R Block to check.

In Ohio, in particular, there is only one tax table for all filers, regardless of married or single, so dual income households paid at a higher rate. There is a joint filing credit that mitigates some of this impact.

In recent years, Ohio’s tax rates have been significantly lowered so the advantage of filing separately doesn’t really exist much anymore.

mega317 wrote: ↑Thu Feb 16, 2023 4:10 pm I had e-delivery selected on all accounts. Got some in the mail and some not!

Same here. I routinely get mailed docs for 2 of 9 accounts even though all are clearly selected for electronic delivery.

twh wrote: ↑Thu Feb 16, 2023 6:22 pm

Andymoler58 wrote: ↑Thu Feb 16, 2023 5:49 pm Just to confirm, you don't have to take your dividends as qualified do you?

If you have margin expense, then you can offset that against ordinary dividend income

Not so, if you elect to take it as qualified,

Huh? Maybe you should explain your problem more than you have.

Investment income taxed at preferred rates isn’t included in net investment income for purposes of deducting investment (margin) interest. OP wants to show qualified dividends as ordinary to increase net investment income.

Yes you should recharacterize. You’ll need to do so before 4/15/23.

As for the backdoor Roth questions, do either you or your spouse have other tIRA balances?

The conversions to Roth would be 2023 activity, so you won’t get a 1099R until next year if you follow through with the backdoor.

I’m mincing words, margin interest can’t be “offset” against dividends. It is a schedule A deduction limited to your net investment income.

The answer to your question appears to be yes…see the qualified dividends section of the following:

https://www.schwab.com/learn/story/inve ... deductible

However, it is not a plain and simple issue:

Note: The election to treat qualified dividends as ordinary dividends should not be taken lightly. Once made, the election can only be revoked with IRS consent. Consult with your tax professional before implementing this tax strategy.

In the end, you only get a benefit from doing this if you itemize your deductions.

[quote=b When do you think this changed? The exact same language appears in the prospectus dated December 17, 2021. Further, while the language is somewhat different in the prospectus dated December 20, 2019 (“Under normal circumstances, at least 80% of the Fund’s assets will be invested in U.S. Treasury securities; the remainder of the assets may be invested in securities issued by U.S. governmental agencies.”), the Statement of Additional Information of the same date says “the term [US government securities] also refers to repurchase agreements collateralized by such securities.” (p. B-6) Therefore, the Treasury Money Market fund has been able to invest in repurchase agreements for at least 3+ years and I don’t think there has been any r...

zag00 wrote: ↑Thu Feb 16, 2023 7:58 am

FunOnABudget wrote: ↑Thu Feb 16, 2023 7:34 am You don't need to be an S-Corp to file taxes as an S-Corp.

How so? We're going thru the process now, so genuinely curious.

An LLC can elect to be taxed as a partnership, a C Corp or and S Corp, but the election needs to be made, so I’m not entirely sure what the statement you quoted means.

Be aware that VUSXX has changed its investment policy and can now use repurchase agreements, which are not state tax exempt. It is not yet known how this will impact its taxability in 2023. https://investor.vanguard.com/investment-products/mutual-funds/profile/vusxx Vanguard Treasury Money Market Fund, which invests primarily in U.S. Treasury securities, seeks to provide current income and preserve shareholders’ principal investment by maintaining a share price of $1. This fund at a minimum invests 80% of the assets in debt issued directly by the government in the form of Treasury bills and in repurchase agreements fully collateralized by U.S. Treasury securities. As a government money market fund, this fund is required to invest at least 9...

Let’s say you have $3,226 of part b claims in 2023. As the patient, you will be responsible for the first $226 as you’re deductible and 20% of the excess over the deductible, so 20% of $3,000, or $600.

Your total responsibility would be $886.

Plan g then steps in. Under the lower deductible plan, you’ll owe just the $226. Under the high deductible G, you’ll owe the full $886 plus the next $1,814 of part A coinsurance and deductible plus part B coinsurance until you hit $2,700.

No, capital gains and losses must be reported in the year they are recognized and capital loss carryforwards are forfeited if not used to the fullest extent in each tax year.

I think you are confusing two issues. Whether he is a dependent should be determined according to the criteria with no choice in the matter. You provide the majority of his support so I believe he is a dependent. A dependent has to file if their earned income is over $12550 or investment income over $1100. You have the option to claim his income since he is under those limits. He may want to file if he had taxes withheld or wants to get the EITC https://www.investopedia.com/articles/taxes/08/kids-first-income-tax-return.asp Either way he shouldn't owe tax because he is under his standard deduction. However, I'm not sure how you get TurboTax to report it correctly. Parents can only elect include dividends, interest and capital gains distrib...

Thanks. Fixed. Dont recall having to do that before but who knows.

Random Musings wrote: ↑Thu Feb 09, 2023 8:06 pm

LadyGeek wrote: ↑Sun Feb 05, 2023 2:09 pm Thanks! Actually, it was always doing this and I never noticed it. The timezone setting for those not logged in was wrong. When not logged in, the timezone will now be US Central time. Why? That's where the site owner lives.

The site home page also shows US Central time (logged in or not).

Logged in and post times are GMT.

RM

Same for me. Logged out your post was 8:06pm on 2/9. Logged in it now says 2:06am on 2/10. I’m in EST for what it’s worth.

I'm in agreement that the issue is a poorly defined "substantially identical" which is, as noted in the article, incredibly outdated with how the majority of investments are made these days. I couldn't, in good faith, say voting and nonvoting shares of the same company weren't substantially identical. That's really pushing the envelope.

As others have mentioned, it won't change my TLH habits. IMO, VTI and VV (large cap index) are not substantially identical as VV doesn't have several thousand of the investments VTI does.

Until IRS provides more guidance or Congress changes the law, I'm staying the course.

You could issue 1099's to your colleagues which would give the IRS some documentation that your income was reduced. Either way you should be able to document their cut on your schedule C. Congrats on the prize! The 1099 you are referring to is a nominee 1099: https://www.irs.gov/instructions/i1099gi#en_US_2022_publink1000286907 Nominee/middleman returns. Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts allocable to each. You must also furnish a Form 1099 to each of the other owners. File the new Form 1099 with Form 1096 with the IRS...

The only relevant date for the pro-rata rule is December 31 of the year of conversion...year of contribution doesn't matter, only year of conversion.

If your tIRA balance is zero on December 31 of the conversion year, the pro-rata rule doesn't apply.

Wiggums wrote: ↑Thu Feb 09, 2023 12:22 pm
Yes, you can contribute $7,500 to a Roth IRA.

You have that much earned income and you did not hit the income phase out limit. Where you get the money to fund the Roth does not matter.

OP only has $7,130 of earned income due to to $870 of pre-tax 401K contributions. Box 1 of the W-2 will show $7,130.

I have one more candle on the birthday cake than you do, and we are in the same boat...this community has been a big help.

I still have some cleaning up to do in my taxable brokerage account, but that's a work-in-progress and what I have isn't terrible, just too many index funds trying to replicate what VTSAX already does. Slowly reducing those holdings without taking a huge tax hit.

Congrats on taking control and simplifying!

IRAs are individual accounts and balances are not shared between spouses. The pro rata rule is calculated for each taxpayer separately from the other.

What does it say the balance is for "funds available for trading"? If that is zero, I suspect there may be restrictions on funds for new accounts until they settle from your bank.

MGBMartin wrote: ↑Wed Feb 08, 2023 11:56 am The 7 sec yield is after expense ratio I believe and I think the record date is the beginning of the period used to get 100% of the distributions.
This fund compounds daily and pays out monthly so the record date to ex date is the period for which the distribution is paid; so not really paid a month in arrears. That’s my understanding of how it works anyhow.

Thanks for the clarifcation on how Schwab shows it. I use Vanguard, and the MMFs also compound daily and pay monthly, but the record dates are always the last day of the month, not the first day of the earning period.

When you say "freelance" do you mean as a hobby?

Marking it as a business would imply self-employment taxes (FICA/Medicare) are due, so it is calculating another 15.3% on your net income.

So the question is...do you have a business or is this a hobby? If you have a business, make sure you are deducting any related expenses. Typically (though I can't guarantee always), "contract work" is considered a business and self-employment taxes are due.

Removed

Although it appears to be legal (I'm not expert), I have a moral objection to removing assets which could be used to pay someone's expenses and instead calling upon the rest of us taxpayers to pay for their care while enriching their heirs. Plus, do you want your mother to be in the kind of facility that accepts Medicaid? But it is up to you. Just curious…do you morally object to other forms of legal estate planning, such as trusts, gifting, etc., that allow people to enrich their heirs by avoiding taxes they should be otherwise paying? Also, the vast majority of nursing homes in the United States are certified for Medicaid. Only about 4-5% of nursing homes in the country aren’t certified to take Medicaid patients. For example, in Ohio, th...

Ricola wrote: ↑Mon Feb 06, 2023 9:26 am What degree of tax-free is VMFXX? A recent Allan Roth article mentions VUSXX Vanguard Treasury Money Market Fund as being Fed and State Tax-free. I can't see where this can be verified anywhere.

Treasuries are not federal tax free...only state tax free. So VUSXX would be mostly state tax free...they don't guarantee it is 100% state tax free, as they are able to invest in repurchase agreements per their fund summary, but I believe it is usually pretty close to 100%.

VMFXX was 37% state tax free in 2022. Some states, however, have a higher threshold in order to meet the state tax free treatment.

Just wait until they invoice you. The penalty and interest on $40 of tax will be far less than the hassle of amending. At least that’s what I would do.

And if they match it fast enough, they may just reduce your refund. They should send you a letter either way.

The only date that matters for the pro rata rule is 12/31 of the year of Roth conversion. As long as the tIRA balance is zero on that date, the pro rata rule doesn’t apply.

Vanguard's settlement fund is the Vanguard Federal Money Market Fund (VFMXX). You can't change that.

All you can do is buy a different fund.

You have to go "My Accounts" then "Buy & Sell" to buy another mutual fund, ETF, stock, bond, etc.

They’ve changed it. The way you described went away with the transition to the new website.

It is now treated as a purchase like any other fund. It will take you to the purchases page and you’ll select the money market fund as your destination and your bank account as the source.

You are not eligible to make HSA contributions if you are covered by more than your HSA. You cannot have other insurance that pays any type of benefit prior to you meeting your deductible. As a result, you would not be able to put yourself on her plan in addition to your plan and continue to make HSA contributions.

Regarding her enrolling in her plan on her own, that would most likely be possible (that was always the case with my wife and I). Some workplaces don't allow coverage of a spouse if the spouse if eligible for their own insurance through their employer. You'll need to check with your HR department to see if that is the case with your employer.

As a CPA myself and as others have said, I would highly recommend he get at least a minor in accounting, if not a double major in finance and accounting. While he may not want to go the public accounting route, having the accounting background and solid knowledge of financial statements will give him a big boost. I recall several of my college classmates who were finance majors and said their job prospects were significantly improved with a knowledge of accounting.

Glockenspiel wrote: ↑Mon Jan 30, 2023 1:40 pm Way too much and I need to do something about it. Currently have about $150,000 in checking and savings. Would love to get that down to about $20k-30k.

Just deposit into a Vanguard brokerage and let it sit in the settlement account...currently yielding 4.3%.

To answer the post, somewhere between $1,000 and $3,000, but typically around $2,000. I don't like going below $1,000 in case something comes up, like the $800 garage door repair this month that couldn't go on a CC.

Use ETFs instead of MFs...VTI is equivalent to VTSAX. No minimums on ETFs.