estimating tax on mutual fund?

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GordonG
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Joined: Mon Mar 23, 2015 2:24 pm

estimating tax on mutual fund?

Post by GordonG » Wed Jul 26, 2017 9:09 am

Just wondering if there's a way to estimate the taxes if I sold some of my shares in a mutual fund (FUSVX)? I use Fidelity, and within my account, they give a cost basis. Not that I'm going to do this, but as an example, say the current total value is $50K. According to my account, the cost basis is $42500. Say I wanted to sell $25K worth of shares. Is there a quick and dirty way to estimate how much tax I'd owe when it's time to pay up?

I found this calculator. Is this reasonable to use?
https://smartasset.com/investing/capita ... 0gains%20c

pshonore
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Re: estimating tax on mutual fund?

Post by pshonore » Wed Jul 26, 2017 9:45 am

That calculator seems reasonable for a start for a total sale. Remember to separate the gains into short term vs long term. Determining basis for the shares you select may be an issue. If you have carryover losses, it doesn't seem to consider them.

Topic Author
GordonG
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Joined: Mon Mar 23, 2015 2:24 pm

Re: estimating tax on mutual fund?

Post by GordonG » Wed Jul 26, 2017 9:56 am

Thanks!

blastoff
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Re: estimating tax on mutual fund?

Post by blastoff » Wed Jul 26, 2017 10:40 am

First, I assume these funds are in a taxable account.

Unless you are at the low (<=15% bracket) or high-end of tax brackets, ~15% of realized long term gains is usually safe since that is the LTCG rate for most folks. The fidelity website will make any realized gains clear as well as basis. You can find out the various "tax lots" ahead of time.

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grabiner
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Re: estimating tax on mutual fund?

Post by grabiner » Wed Jul 26, 2017 9:58 pm

If you use tax software, see what happens to your taxes if you add this amount in capital gains to your income. There are many provisions in the tax code which phase out with income, so you might pay more than 15% tax. For example, if you are in the phase-out for the child tax credit, every $1000 costs you $50 of child tax credit, in addition to the $150 in tax if this income is a long-term capital gain.

Also remember to add your state tax rate, and if you itemize deductions, reduce that by your federal tax rate. For example, if you are in a 25% federal and 8% state tax bracket, your effective marginal state tax rate is 6%, since 1/4 of the 8% state tax comes back to you in lower federal taxes.
Wiki David Grabiner

blastoff
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Re: estimating tax on mutual fund?

Post by blastoff » Thu Jul 27, 2017 1:49 am

grabiner wrote:If you use tax software, see what happens to your taxes if you add this amount in capital gains to your income. There are many provisions in the tax code which phase out with income, so you might pay more than 15% tax. For example, if you are in the phase-out for the child tax credit, every $1000 costs you $50 of child tax credit, in addition to the $150 in tax if this income is a long-term capital gain.

Also remember to add your state tax rate, and if you itemize deductions, reduce that by your federal tax rate. For example, if you are in a 25% federal and 8% state tax bracket, your effective marginal state tax rate is 6%, since 1/4 of the 8% state tax comes back to you in lower federal taxes.
I agree.

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