Doing your own taxes with a taxable account.

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heybro
Posts: 145
Joined: Thu May 12, 2016 9:17 pm

Doing your own taxes with a taxable account.

Post by heybro » Tue Aug 13, 2019 3:53 am

I have always done my own taxes and enjoy doing so.

What is the process like for reporting gains on a taxable account such as dividends for the year and then once you sell at a profit?

Is there a way to set up your taxable account that makes taxes easier? (Such as buying stock funds per month or as one lump sum or not-investing-dividends once you receive them?)

typical.investor
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Joined: Mon Jun 11, 2018 3:17 am

Re: Doing your own taxes with a taxable account.

Post by typical.investor » Tue Aug 13, 2019 4:01 am

heybro wrote:
Tue Aug 13, 2019 3:53 am
I have always done my own taxes and enjoy doing so.

What is the process like for reporting gains on a taxable account such as dividends for the year and then once you sell at a profit?

Is there a way to set up your taxable account that makes taxes easier? (Such as buying stock funds per month or as one lump sum or not-investing-dividends once you receive them?)
Um, import the data into turbotax or doesn't that count as doing your own?

HawkeyePierce
Posts: 526
Joined: Tue Mar 05, 2019 10:29 pm
Location: Colorado

Re: Doing your own taxes with a taxable account.

Post by HawkeyePierce » Tue Aug 13, 2019 4:14 am

You get a 1099, you use that to calculate gains and losses with a Form 8949, that goes onto a Schedule D as part of your 1040.

It's less complicated than it sounds.

Disclaimer: I am not a tax preparer. :happy

fundseeker
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Joined: Mon Dec 24, 2007 9:02 am

Re: Doing your own taxes with a taxable account.

Post by fundseeker » Tue Aug 13, 2019 5:58 am

If I understand your question(s), your broker should provide you with everything you'll need to know about the tax implications from your transactions.

livesoft
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Re: Doing your own taxes with a taxable account.

Post by livesoft » Tue Aug 13, 2019 6:15 am

It's pretty simple: Give your 1099-DIV and 1099-B along with your W-2 to your dad. He'll fill out your tax return for you.

It makes no difference whether one reinvests dividends or not. It makes no difference how often one purchases shares.
Last edited by livesoft on Tue Aug 13, 2019 6:22 am, edited 1 time in total.
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Chris K Jones
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Re: Doing your own taxes with a taxable account.

Post by Chris K Jones » Tue Aug 13, 2019 6:20 am

I have done my own taxes for almost 30 years and have taxable accounts. If you use a computer program, like Turbotax, this is very simple. As typical.investor suggests, it can be imported directly to your return. If you do this with paper and a calculator, it is more burdensome and, I would suggest, more prone to mistakes. Best wishes.

DecumulatorDoc
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Re: Doing your own taxes with a taxable account.

Post by DecumulatorDoc » Tue Aug 13, 2019 7:21 am

heybro wrote:
Tue Aug 13, 2019 3:53 am
I have always done my own taxes and enjoy doing so.

What is the process like for reporting gains on a taxable account such as dividends for the year and then once you sell at a profit?

Is there a way to set up your taxable account that makes taxes easier? (Such as buying stock funds per month or as one lump sum or not-investing-dividends once you receive them?)
It is relatively simple these days. The brokerage firm will provide you with a consolidated 1099, reporting dividends (qualified and nonqualified) and capital gains (losses), as well as other things like foreign taxes paid.

It's true that reinvested dividends and frequent new monthly purchases create additional small tax lots with each transaction. But with requirements now for brokerages to report cost basis as well as sale proceeds to the IRS, most of the time you won't have to specify each individual tax lot sell on form 8949 at tax time. You will simply report the final totals directly on your schedule D. Still its even easier if your tax software can directly import info from your brokerage.

So feel free to buy early and often whenever you have cash to invest.

HomeStretch
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Re: Doing your own taxes with a taxable account.

Post by HomeStretch » Tue Aug 13, 2019 7:29 am

It’s not hard and the TurboTax import feature is helpful.

You might need to fill out an extra tax form or make Federal or state adjustments to the amounts reported on the Form 1099s such as:
1. Wash sales not reported on 1099
2. Holding period not met on qualified dividends
3. Tax credit or deduction for foreign taxes paid on dividends
4. Federal or state-exempt (or partially-exempt) dividends

Minimizing sales and the number of tax lots in a Taxable account might reduce # of transactions to be reported but aren’t really necessary due to 1099 auto-import and aggregation of transactions.

NoblesvilleIN
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Location: Noblesville IN

Re: Doing your own taxes with a taxable account.

Post by NoblesvilleIN » Tue Aug 13, 2019 8:38 am

The other thing to keep in mind is that you won't be doing your taxes on February 1st anymore as you typically can with just W-2 income. The earliest that Fidelity provides the 1099 is 2/15. However, because of one investment that I have in my taxable, I normally don't get my 1099 until March 15th.

Note: I have about 25 individual stocks and 8 CD's in my taxable account. The consolidated 1099 that I get from Fidelity has just a few numbers that get loaded to my tax software. If I had to enter them manually, it would be easy. I wouldn't sweat it.

I'm assuming that you are investing in mutual funds like most folks. Not to start a discussion, but I would avoid investments in your taxable account that generate a K-1. They were a pain for me to understand. I was happy to get rid of a couple investments that generated K-1's. Google your prospective investment before purchasing if you question whether you will get a 1099 or K-1.

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grabiner
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Re: Doing your own taxes with a taxable account.

Post by grabiner » Tue Aug 13, 2019 10:02 pm

HomeStretch wrote:
Tue Aug 13, 2019 7:29 am
It’s not hard and the TurboTax import feature is helpful.

You might need to fill out an extra tax form or make Federal or state adjustments to the amounts reported on the Form 1099s such as:
1. Wash sales not reported on 1099
2. Holding period not met on qualified dividends
3. Tax credit or deduction for foreign taxes paid on dividends
4. Federal or state-exempt (or partially-exempt) dividends

Minimizing sales and the number of tax lots in a Taxable account might reduce # of transactions to be reported but aren’t really necessary due to 1099 auto-import and aggregation of transactions.
Note that if you have non-covered shares, the 1099 from your broker may not report what you paid for the shares, and even if it does, the number may be wrong. Vanguard, for example, uses average cost for non-covered shares of mutual funds even if I used specific identification when selling. You can correct this on your tax form. (This is not likely to apply to the OP, who is apparently new to taxable investing.)
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