need $5000.00 , take from U.S. treasury bonds or brokerage account

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riptide
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need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by riptide » Mon Mar 19, 2018 1:43 pm

I need to pay property tax on my rental and I owe Federal taxes amounting total to around $5000.00
The reason I owe federal taxes is because I sold one Treasury Bond last year! They are heavily taxed when you cash them out!

I would have broke even or even received a federal refund if I did not sell one of the treasury bonds last year...
I hate to touch the brokerage account with the stocks so volatile now, but also hate paying the tax on cashing out the treasury bonds.
Use which one??

I needed money at the beginning of the year purchasing a house, and asked the same question then, which account to take money from. I purchased a new home , and although I kept the monthly payment down, that was my goal, at 1,166.00 a month, I put an a enormous amount of money down into the house. I have about $95,000 in home equity in my home already, but I have no liquid money to work with, which I need now. I was told not to put all my money into the home, but I chose to, and now find myself in this situation....
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Tyler Aspect
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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by Tyler Aspect » Mon Mar 19, 2018 2:51 pm

What you should do depends on if your current stock percentage is above or below your chosen asset allocation. Sell the asset class that is above your target.
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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by bloom2708 » Mon Mar 19, 2018 2:55 pm

How big was the Treasury Bond. Owing $5k would indicate a long term gain of $33k+. Seems unlikely on a Treasury Bond.

Are you sure there aren't multiple components to your owing the tax? Go over all your tax documents with a fine tooth comb again. Checking for errors if you do your own taxes.

Sell $5k of something in your brokerage account. If selling multiple shares, look to match losses with gains so you cancel each other out and don't end up with much of a tax bill.

You need to get to a point where $5k isn't life altering. Cushion in checking, Emergency Fund, Taxes fund. To me taxable brokerage is the place that you use for the lumpy expenses. 401k and Roth hold the long, long term money.
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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by Iliketoridemybike » Mon Mar 19, 2018 2:58 pm

Cash first, which it sounds like you do not have.
Then tax loss harvest, are you down in anything?
Anything with a gain, you'll pay tax upon the sale.

invst65
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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by invst65 » Mon Mar 19, 2018 2:58 pm

If you have anything in your brokerage account that you could sell at a $5k loss right now you at least wouldn't have to worry about any additional tax burden for next year.

Also, I understand you can pay your federal taxes by credit card although I think there is a hefty fee involved.

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riptide
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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by riptide » Mon Mar 19, 2018 3:07 pm

Thanks much for all the helpful replies!!
To add the tax is correct for sure...I owe 2600.00 on the second property I rent out! And, $1700.00 Federal taxes for selling the treasury bond (I sold one of 6, each holds about $8,200.00 currently). I have five left, which total around $42,000 currently.

It looks like I will try to sell from a loss in the brokerage account. Thanks again!
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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by lahob » Mon Mar 19, 2018 3:33 pm

riptide wrote:
Mon Mar 19, 2018 3:07 pm
And, $1700.00 Federal taxes for selling the treasury bond (I sold one of 6, each holds about $8,200.00 currently).
As bloom2708 said, it seems unlikely that you owe that much tax on the sale of a Treasury bond. 1700/8200 is suspiciously close to 20%. Are you sure you aren't to trying to pay capital gains tax on the entire sale proceeds and not just the gains?

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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by lstone19 » Mon Mar 19, 2018 10:05 pm

I'm wondering just what these "treasury bonds" really are. Could the OP actually mean a fairly large Savings Bond with a lot of accrued untaxed nterest? For real treasury bonds, I believe $1,000 face value is considered 1 bond so $8,200 value does not make sense for one bond. And if the OP means real treasury bonds (minimum 10 years maturity for bonds as opposed to T-notes or T-bills), could they be 30-year $10,000 face value that have lost value due to rising interest rates (although a quick check says nothing in the 20 to 30 year range is trading that low ($82 (per $100)) and as I said, 1 bond normally equals $1,000 face value). So I'm betting on these are Savings Bonds with accrued interest.

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riptide
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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by riptide » Tue Mar 20, 2018 7:01 am

The Treasury bonds are EE Series 30 year Treasury Bonds that mature in 2022. The face value of each when purchased was $5000.00. They have grown over twenty something years. I sold only 1 of 6 and it made my federal tax go up is all I am saying. I have an accountant I go to each year for taxes, and she told me I owed to the Fed Government because of my Bond sale, or I would have been even or received a small return.
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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by Grt2bOutdoors » Tue Mar 20, 2018 7:07 am

riptide wrote:
Tue Mar 20, 2018 7:01 am
The Treasury bonds are EE Series 30 year Treasury Bonds that mature in 2022. The face value of each when purchased was $5000.00. They have grown over twenty something years. I sold only 1 of 6 and it made my federal tax go up is all I am saying. I have an accountant I go to each year for taxes, and she told me I owed to the Fed Government because of my Bond sale, or I would have been even or received a small return.
That’s correct, the price you receive less the cost is fully taxable by federal government at ordinary income tax rates.
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Re: need $5000.00 , take from U.S. treasury bonds or brokerage account

Post by Call_Me_Op » Tue Mar 20, 2018 7:09 am

riptide wrote:
Tue Mar 20, 2018 7:01 am
The Treasury bonds are EE Series 30 year Treasury Bonds that mature in 2022. The face value of each when purchased was $5000.00. They have grown over twenty something years. I sold only 1 of 6 and it made my federal tax go up is all I am saying. I have an accountant I go to each year for taxes, and she told me I owed to the Fed Government because of my Bond sale, or I would have been even or received a small return.
We usually call those "Savings Bonds" or simply "EE Bonds" to distinguish them from marketable US Treasury Bonds.
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