So I'll owe the IRS $10K in April! Yikes... (pay, taxes, account)
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I had this non retirement account portfolio at Fidelity for five years. It did well to the extent I had gains of 73K. I decided to cash out in mid September (Fidelity was managing the portfolio and they kept losing me money) and put it into CDs, but now I am going to be hit with this tax, apparently. I have no tax advisor nor do I know where to find one.
What are my options for reducing this tax? How do I find a good tax advisor?
I had this non retirement account portfolio at Fidelity for five years. It did well to the extent I had gains of 73K. I decided to cash out in mid September (Fidelity was managing the portfolio and they kept losing me money) and put it into CDs, but now I am going to be hit with this tax, apparently. I have no tax advisor nor do I know where to find one.
What are my options for reducing this tax? How do I find a good tax advisor?
Have you fully funded an IRA for you and your spouse? If not that will cover most of the liability, otherwise I always prefer to donate to a charity and take the deduction rather than give it to the IRS
That's a tough one. You're saying the money is now tied up in the CDs (liquidity risk)?
I'm assuming these were all long-term capital gains. $73,000 x .15 = $10,950. If you're at the 28% tax bracket, funding an IRA for both of you will only reduce your tax liability by $2800 or a little over a quarter of your capital gains tax.
Definitely need to find a tax advisor to weed out deductions that can lower your liability.
I have a trust fund that I can't touch but which I have to pay tax on every year. It's such a pain in the ass. I never know if it's going to add $200 or $4000 to my tax liability each year. They don't even send me the K-1 until two weeks before tax filings are due.
That's a tough one. You're saying the money is now tied up in the CDs (liquidity risk)?
I'm assuming these were all long-term capital gains. $73,000 x .15 = $10,950. If you're at the 28% tax bracket, funding an IRA for both of you will only reduce your tax liability by $2800 or a little over a quarter of your capital gains tax.
Definitely need to find a tax advisor to weed out deductions that can lower your liability.
I have a trust fund that I can't touch but which I have to pay tax on every year. It's such a pain in the ass. I never know if it's going to add $200 or $4000 to my tax liability each year. They don't even send me the K-1 until two weeks before tax filings are due.
Yes, most of the money is tied up in CDs. Fortunately, one matures in April or I think I'd be flipping out over a tax bill that large. The 73K is called "long term gains," not long term capital gains, which is much less, but Fidelity seems to think I am on the hook for that 73K. I should be happy the return was so good and I just would have lost what I'll be paying in taxes had I stayed in the market until October, so I guess I cannot complain. It's just such a big amount all at once. I will have to snoop around for a good tax advisor between now and April. Thanks.
That's a tough one. You're saying the money is now tied up in the CDs (liquidity risk)?
I'm assuming these were all long-term capital gains. $73,000 x .15 = $10,950. If you're at the 28% tax bracket, funding an IRA for both of you will only reduce your tax liability by $2800 or a little over a quarter of your capital gains tax.
Definitely need to find a tax advisor to weed out deductions that can lower your liability.
I have a trust fund that I can't touch but which I have to pay tax on every year. It's such a pain in the ass. I never know if it's going to add $200 or $4000 to my tax liability each year. They don't even send me the K-1 until two weeks before tax filings are due.
Yes, in CDs. I went through the K-1 thing for several years, until my family's limited partnership was terminated. I've always done my own taxes (K-1s prepared by smart brothers), but this year things are too tricky for me to do this. Thanks.
If you still end up owing that much, (which I hope you don't!), you can make payment arrangements with the IRS. I am repeating myself, but please go to www.irs.gov, and you can actually save a pdf of the new Publication 17, which is packed with valuable info. Good luck!
If you still end up owing that much, (which I hope you don't!), you can make payment arrangements with the IRS. I am repeating myself, but please go to www.irs.gov, and you can actually save a pdf of the new Publication 17, which is packed with valuable info. Good luck!
Thanks, I will do that. In years gone by I do my taxes on April 15. Haha. Not this year.
Location: Stuck on the East Coast, hoping to head West
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I would advise you go to an enrolled agent (they only specialize in taxes) or a cpa who specializes in your tax situation. I strongly urge you to go now, before the end of the year. There are things that you can do before the end of the year that might be able to help, but you really need to sit down with someone who can review your current tax situation and advise you of the best course to take.
Off the top of my head, I'd start by asking you if you wanted to sell any big losers to offset gains. But again, I'd contact a tax professional.
Incidentally, here's an article that might be of interest
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Quote:
Originally Posted by bande1102
...you really need to sit down with someone who can review your current tax situation and advise you of the best course to take.
Off the top of my head, I'd start by asking you if you wanted to sell any big losers to offset gains. But again, I'd contact a tax professional.
..
yes do this quick!!!
you might want to sell some losses (you can offset your entire gain + $3000 in losses) You can get back into an adjacent investment (ETF / Mutual fund) and avoid wash sale rule.
Giving to charity is worthwhile too.
You can get some tax software a run a bunch of scenarios to help you decide, but the clock is ticking. Not to alarm you... but you may be due for a penalty if you haven't been paying estimated taxes. You can avoid the penalty if you just pay a small % above your previous yrs earnings. (check irs.gov)
you might want to sell some losses (you can offset your entire gain + $3000 in losses) You can get back into an adjacent investment (ETF / Mutual fund) and avoid wash sale rule.
Giving to charity is worthwhile too.
You can get some tax software a run a bunch of scenarios to help you decide, but the clock is ticking. Not to alarm you... but you may be due for a penalty if you haven't been paying estimated taxes. You can avoid the penalty if you just pay a small % above your previous yrs earnings. (check irs.gov)
Ok, now I am alarmed. Each year I've just been doing my taxes on Turbo Tax, plugging in Fidelity's numbers, and paying the tax bill. I am thinking this whole thing could turn ugly, but I hope not. Fidelity told me the max I'll have to pay is 15%.
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