New answers tagged taxes
2
The common misconception is that a wash-sale permanently disallows adding the loss to your taxes. That is simply incorrect; it temporarily disallows it - because you bought the same security, it is 'parked' in the newly bought pieces, and once you sell those, it comes back out (unless you buy them again within 30 days, then it get's 'parked' again, etc.).
...
3
On Jan 2nd you realize a loss of $1. When you buy the share back on Jan 3rd, you create a wash sale and the $1 loss deduction is disallowed (temporarily) and must be carried forward.
The disallowed loss is added to the cost of the replacement share and when you sell on Jan 4th, you realize the $2 loss, for tax purposes.
All of this just means that it's an ...
2
As long as these are all the transactions of XYZ and you don't reopen the position within 30 days you have a tax loss of $2 that you can deduct.
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Flipping is a generic term that refers to purchasing an asset with the intent of selling it for a quick profit in a short period of time. It's most commonly used in regard to short-term real estate transactions and selling IPO shares shortly after they begin trading. You could also use flipping for short term stock trading but it's non specific. It could ...
0
You need to have an open position for the wash sale rule to matter at all. The whole rationale for the wash sale rule is gains are taxed now, losses might be deductible now.
If you close a position with a loss, the loss can be deducted as long as you don't reopen the position within 30 days. If you do reopen the position within 30 days the loss, rather than ...
2
The page you linked to says that while you wait for your VAT number:
You cannot charge or show VAT on your invoices until you get your VAT number. However, you’ll still have to pay the VAT to HMRC for this period.
You should increase your prices to allow for this and tell your customers why. Once you’ve got your VAT number you can then reissue
the invoices ...
1
However my understanding is that the wash rule applies here since the underlying security is the same for both.
The above is not correct. A wash sale occurs if you sell securities at a loss and buy substantially identical replacement shares within 30 days before or after the sale. A long put and a long call are not substantially identical because they are ...
4
I've only seen this option on disability insurance, so correct me if that is not accurate.
The difference is whether the benefit is taxable. If you buy the insurance with pre-tax dollars, then any benefit you get would be considered income and subject to income tax.
If you buy it with after-tax dollars, then the benefit would not be taxable.
So which to ...
2
Definitely follow up with your employer on that one. A common issue I suspect this year will be people who went on restricted or part-time status for a period of the year (due to budget cuts / office closure/ etc.) may not have had their FSA contributions removed (or, at least, accounted for) for those paychecks properly, and that may lead to issues like ...
2
I'm assuming that your business is a sole proprietorship, and that you have not set up a corporation or an LLC.
The DBA form (Assumed Name Certificate) that you submit to a Texas county just registers the name that you are using for your business. It does not really create any type of legal entity. If you have not created a corporation or LLC for your ...
answered Jan 11 at 23:20
Ben Miller - Remember Monica
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3
I can’t comment on the Italian side of things, but there’s no UK tax payable on receiving an inheritance. (There’s tax paid by the estate on its total value, but that’s out of the UK’s jurisdiction in this case.)
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Form 1042-S goes by the calendar year and reports payments to you, not sales. If your first payment will be in February 2021, then I expect that your first Form 1042-S would be sent in the first part of 2022. This will be the 2021 version of the form, as it covers all the payments and withholdings made during calendar year 2021.
answered Jan 11 at 11:52
Ben Miller - Remember Monica
99.1k25 gold badges276 silver badges355 bronze badges
1
In Publication 519-A, section Roth IRAs -> Can You Contribute to a Roth IRA? -> What if You Contribute Too Much? -> Withdrawal of excess contributions (here is the one from 2019), it says:
For purposes of determining excess contributions, any contribution
that is withdrawn on or before the due date (including extensions) for
filing your tax return ...
1
Since these are Roth contributions, you already payed taxes (or accrued a tax obligation) on the income you used to fund the contribution when you earned it as income. There should be no penalty as long as you with draw it before the tax filing deadline.
You also must withdraw any gains you made on those contributions, which may be somewhat complicated to ...
2
You filed 2019 taxes wrong. Since you were married as of December 31, 2019, you cannot file as "Single" filing status. You could only file as Married Filing Jointly or Married Filing Separately (or in rare cases Head of Household if the two of you have been living apart for the latter half of the year and you have a dependent; I will assume that ...
2
The time for getting the stimulus payment has essentially passed. The government is now in the process of sending out the second round of stimulus payment, and they are going to be all done sending out stimulus payments by January 15, 2021. So if your brother is not at this point eligible for a payment, there really isn't realistically anything you could ...
answered Jan 8 at 21:30
Ben Miller - Remember Monica
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0
My brother was disabled and i claimed him on my 2019 taxes. If i amend
my taxes and take him off, can he receive the stimulus to help out the
family? If he's not a dependent in 2020, and files his own taxes, can
he get the stimulus then on his own?
Just trying to find out before I amend my taxes.
The tax years related to the $1,200 and $600 stimulus ...
0
This is a very big subject and, unfortunately, there are no universal answers. The general advice though is to take advantage of the retirement system where you are resident when you are resident there. If you have sizeable retirement investments, you should consult an accountant knowledgeable in both tax systems to help you with tax planning before you ...
2
LLCs still pay taxes
Non-resident aliens also pay taxes to the US
There is no getting around paying taxes in the U.S. if you transact here. Dividends and stock buying/selling are generally very public activities. There will be public records of the publicly traded companies sending you a check or depositing into your account. Even if you manage to evade ...
3
The UK doesn't have any gift tax and you don't need to declare anything assuming the money is being sent by some kind of bank/money transfer. If it was being carried as cash then you do have to declare that for money laundering purposes, but that'd obviously be a bad idea for many reasons anyway, and the declaration in itself isn't a problem.
In theory ...
41
At the time of the sale, you can designate what shares you want sold. The IRS requires that your broker verifies that those specific shares were sold. The IRS calls this "specific share identification." Without that confirmation, the IRS will default to FIFO (First In, First Out).
2
Relaxed pointed to a great article in the comment section, https://www.capital.fr/votre-argent/present-d-usage-1317692 (mirror):
La valeur du présent d'usage ne doit pas non plus être disproportionnée par rapport aux revenus et au patrimoine du donateur. En pratique, la jurisprudence constante considère que le montant du présent d'usage ne doit pas excéder ...
2
I use Fidelity as well, and they issue a consolidated 1099, which includes the 1099-B, for my ETF transactions.
-2
Gains and losses from the sale of ETF shares are reported on Form 1099-B issued by your broker.
How the gains (or losses) are taxed depends on the type of ETF.
EDIT
I surmise that the taxation comment is the reason for the down votes. Just in case you're not familiar with this, ETFs involved in currencies, futures, and metals are sectors that receive ...
0
Yes. The allowances are separate.
Your employment income would be taxed via PAYE, and then you’d complete a self assessment tax return and declare your use of the allowance up to £1000 (the amount of allowance used cannot exceed your income from self employment). If your expenses are higher than £1,000, you will not claim this allowance and would instead ...
5
When you file your taxes, the contribution will count as a deduction, so it is effectively pre-tax (talking about federal income taxes, which is the typical understanding of 'pre-tax').
What it doesn't give you back is the payroll tax you paid on the amount - Social Security 6.2% and Medicare 1.45% - those are gone.
In other words: an HSA contribution ...
2
Presuming you're single, you only owe:
income tax if you if you earn more than $12,200 in a year.
Social Security tax on earned income; investment income is unearned.
Medicare tax if your income is over $200,000.
You must file a tax return, but probably owe nothing.
(Starting next year, I recommend that you get in the habit of setting aside 10% of unearned ...
4
It's very likely you have to FILE a tax return,
even if you have to pay nothing.
That's the most likely situation.
Trading is ALL paperwork. If you have an "I hate paperwork" attitude (which is perfectly reasonable), I would strongly suggest just forgetting about trading.
If you're in the US it's extremely easy to file your tax return, using taxact....
0
I fundamentally agree with TomTom on this one. From a legal point of view, the settlement date is irrelevant. What is important is when you take decisive action.
In the long run, however, the IRS does not really care too much which year you book your transaction, if its a matter of a day or two. They always look at the big picture. So, you can report the P&...
2
Yes. See line 30 of the 1040.
The payment was based on income in 2018, or 2019 if one filed already. If the 2020 return shows a lower income, any money owed to the taxpayer will reconcile here. Same for those who did not receive a check for reasons such as yours.
(Note, if 2020 income was higher, no money is clawed back, whatever was received so far is not ...
answered Dec 28 '20 at 12:44
0
Whilz points out an interesting difference:
There will be an exit tax if you relinquish and you were 1) a US citizen, or 2) a long-term resident, which means a green card for 8 or more years in the 15 year period immediately prior to expatriation.
3
https://www.irs.gov/pub/irs-pdf/f8949.pdf
From the instructions for form 8949:
Column (c)—Date Sold or Disposed Of
Enter in this column the date you sold or disposed of the property. Use the trade date for stocks and bonds traded on an exchange or over-the-counter market. For a short sale, enter the date you delivered the property to the broker or lender to ...
6
It's no surprise but there are contradictory articles about this on the net for U.S. taxation. Some suggest that the trade must settle this year in order to be claimed this year.
I consider Fairmark.com to be a reliable source of tax information. Here's their take on tax selling rules:
When determining what year you sold your stock, the trade date is what ...
7
2020 - Settlement is an administrative operation and may depend on market (i.e. you give a US example, it is different in other countries). You SELL them on T - the fact that the paperwork transfer takes +2 should not matter.
0
https://www.taxtips.ca/personaltax/giftsandinheritances.htm
There is no "gift tax" in Canada. Any resident of Canada who receives a gift or inheritance of any amount from almost any source (except from an employer) will not have to include this in their income.
Your niece won't owe anything.
However, if capital property (e.g. real estate, ...
2
These might help:
https://www.irs.gov/individuals/international-taxpayers/determining-alien-tax-status
If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of two tests. You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for ...
1
You basically have the the concept correct. If you donate $X to a charity it will save you Y% of your donation in taxes. Donating money, or stuff, to a charity never saves as much as the value of the item.
There could be a few very rare edge cases where donating money or stuff gets you under a threshold, but since the the tax deduction takes place late in ...
3
There is no net gain.
I am in the 22% bracket and when I donate $1000 to charity, I see my net tax bill drop $220.
When I ‘donate’ to someone in need directly, there’s no such deduction. Which is why it’s better from a tax perspective to use a registered charity.
Similar to how I look at mortgage interest - the tax deduction can be a discount on the mortgage ...
answered Dec 24 '20 at 18:45
1
Isn't the tax system progressive, so that your first (rough numbers from memory most likely inaccurate) say, $12000 gets taxed at X%, while your next, say, $8000 gets taxed at Y% (Y>X), and your next $50000 gets taxed at Z% (Z>Y).
The term for this is "marginal tax rates".
In this case, supposing you had earned $22,000 in a year and then ...
2
Buying a house is a personal preference. The only real financial incentive for buying property that way is all of much of the mortgage interest and some taxes are deductible, so you are getting a little bit of a tax advantage from spending money on a mortgage payment.
But here is an option I didn't see mentioned. You could create a business, typically an LLC,...
1
Talk to your employer. If you can return the money this year, it makes the whole thing easier.
If you pay it back next year...
Sometimes they will reissue a W-2C form with the corrected amount. If they go this route then you can use the adjusted numbers when you file your taxes. If you already have filed the taxes when they issue the W-2C, then the 1040-X ...
0
If I'm not mistaken the only way to do that is, in fact, to file a correction to your 20 return.
https://www.irs.gov/newsroom/file-form-1040-x-to-amend-a-tax-return
It's pretty easy, people do this all the time. (In TaxAct etc., you just click the "amend" button, select the year.)
(Example .. https://www.taxact.com/support/19017/2018/form-1040-x-...
1
Others have contributed deeply into the economical aspects, so let me offer a more emotional viewpoint;
How strongly do you feel about losses and gains in your "investment"?
If you are at the level of income where reasonable gains don't affect your happiness significantly, your emotional perceptions of economic investments may become more important ...
27
Since your primary obsession seems to be "paying less taxes" as opposed to having more spendable income. You could do one of the following.
Earn less by working less/part_time.
Give to charity.
Invest in a money-losing business.
Have non-insurance-covered but tax-deductible medical procedures performed on you.
Or you could just take pride that ...
10
You earn in the order of $200k per year yet spend $725/month on rent.
If you're happy there, the only reason you might move is a moral one. Some people can't afford more than $725/month rent and you can, so there is a moral argument to be made that you should move on to a more expensive place to make place for those who don't have the luxury of such choice (...
2
HELOC Investments
If you browse around this SE, you will see people asking about taking out a HELOC to invest. Obviously, they think that the market is a better place to park money than real estate. That's because over most of the history of the US stock market, that has been true. So if owning a home is not a big priority for you, growing your nest egg ...
1
Instead of house, you can buy a condo which is bigger enough even in future, after you get married.
The advantages of condo are :
HOA will take care of maintenance outside the house
You have to just take care of maintenance inside the house
some condominium associations also support repairs inside the house
You can pay off the condo home loan as soon as ...
2
Things To Consider:
Home ownership is not just mortgage alone. You need to factor in property tax as well. And on a higher valued dwelling and sq. footage, you are looking at a higher tax responsibility.
Which you must pay to your state yearly until you decide not to own the home anymore. Or else they will seize the property.
I know your personal tastes are ...
8
If you're looking for more tax-advantaged space with all of your restrictions, see if your employer allows the mega-backdoor Roth. The mechanism is to use after-tax 401(k) contributions (up to the overall 58k limit), then instantly pull it out to a Roth IRA or Roth 401(k).
This is another 30+k in Roth space (depending on employer pretax matching); remember ...
-1
buy a home ... would help my tax situation
This is completely wrong. It wouldn't help your tax situation in any way.
Or should I really be buying a home?
Go buy a home for $1m.
This requires (about) $100,000 margin.
Tell how much you think the house will be worth in that city in 40 years.
(Lookup prices in that city 40 years ago as a thought experiment.)
...
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