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mlmp08 posted:Most of the time a landlord is passive, and passive income has significant limits on what you can or can't deduct, so for the most part (less repairs and other hard costs), it's going to be treated like regular income. A lot of landlords just lie and say they are active landlords (meaning they personally schedule all repairs, do interviews, inspect the place, etc), and if you are an active landlord, you gain access to many more tax breaks. Zauper posted:Sure, you can use depreciation to lower the tax impact of the income it generates. But being a landlord kind of sucks, especially a small/local landlord. That's helpful, thanks guys. Sorry about the confusion: I have zero interest in being a landlord unless it would have a significant tax benefit over just plowing more money in to VTSAX. I'm somewhat more interested in syndicated real estate. I believe there's a pass through deduction for business/partnership income (on a K-1 say), for example. I'm just trying to figure out whether there are strategies for investment that would help as almost all of our income is W-2, other than some token 1099 consulting work.
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Apr 1, 2023 18:14
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Residency Evil posted:It does. I just have a tough time accepting just how much of our income goes *poof* in comparison to a titan of industry. The tax code rather deliberately hits an inflection point and goes massively regressive.
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Apr 1, 2023 18:57
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Residency Evil posted:Are there any investments that make more sense when you’re subject to the highest marginal tax rates for a significant proportion of your income? My favorite approach is to look in a mirror and repeat the mantra "I live in the USA, my taxes are almost nothing for someone with an income," and then move on with my life.
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Apr 1, 2023 20:29
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Residency Evil posted:I'm somewhat more interested in syndicated real estate. There are various investment vehicles that are set up to part doctors, dentists, and attorneys from their money. Be careful. It's true that labor is generally disadvantaged compared to capital gains by the tax code, and that doesn't seem fair, particularly since most of us, including you, make much more from labor than capital. But you really don't need to get too clever here. Look to see if the math on munis work for you; try to make sure your investment income comes via long term capital gains or qualified dividends as opposed to short term gains or interest; figure out a reasonable asset allocation and stick with it; but otherwise your time is really best spent honing your profession.
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Apr 2, 2023 00:07
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What is an appropriate number of basis points for a wealth management firm?
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Apr 2, 2023 05:19
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Discendo Vox posted:What is an appropriate number of basis points for a wealth management firm? If the advice is bad, no fee is too small. If the AUM fee * (portfolio size) < $3,000, you've got too small a portfolio for it to matter in the short term. But you'll be adding to that portfolio size quite a bit so the math will change yearly. And once you're "locked in" to one then inertia will hurt you. And the company will have a financial incentive to get you to shift over all your assets over to them, potentially suggesting bad ideas during times of change ("yeah roll over that 401k here when switching jobs"). With an AUM fee, there is an extra "push" for them to set you up in a lovely portfolio that is expected to underperform a 3-fund portfolio, because they have to "justify their fee."
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Apr 2, 2023 05:30
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So in attempting to buy CD's through Vanguard, the only 4-6 month CD was from KeyBank. Is there any rhyme or reason to which/why you need pick one bank over another outside of the rate or return? Vanguard only offer's CD's that are FDIC insured so I'm not sure what would differentiate them.
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Apr 2, 2023 16:40
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GordonComstock posted:So in attempting to buy CD's through Vanguard, the only 4-6 month CD was from KeyBank. Is there any rhyme or reason to which/why you need pick one bank over another outside of the rate or return? Vanguard only offer's CD's that are FDIC insured so I'm not sure what would differentiate them. They should be functionally interchangeable unless you need over $250k of FDIC insurance
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Apr 2, 2023 17:32
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Motronic posted:I don't think it makes sense at any number. So to put a finer point on it - there are substantial tax implications to exercising the ISO stock options I have. I got lucky my first go round and was able to do it but I had to pay the IRS a 6 figure tax bill to do it. The thing, at least as I understand it from friends, is that these firms help find ways to tax defer these gains over time through tax loss harvesting, qualified opportunity zones (QOZ), and more. In some cases, like the QOZ, it can be difficult to directly access those as an individual investor. Anyway - I do agree with your statement regarding the investments themselves. The problem is how to deal with substantial tax implications and get out the other side without massively over-leveraging myself or having to liquidate my brokerage on a bet.
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Apr 2, 2023 17:55
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rufius posted:So to put a finer point on it - there are substantial tax implications to exercising the ISO stock options I have. I got lucky my first go round and was able to do it but I had to pay the IRS a 6 figure tax bill to do it. As someone who went through an IPO and had those six figure tax bills for several years all I can tell you is you're not going to go broke paying taxes. You'll go broke because you're trying to be too clever and lose your rear end on some bullshit QOZ real estate scheme they are primarily marketing to doctors. Or by trying to exercise options that aren't liquid, which I hope you aren't doing.
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Apr 2, 2023 19:01
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Motronic posted:As someone who went through an IPO and had those six figure tax bills for several years all I can tell you is you're not going to go broke paying taxes. You'll go broke because you're trying to be too clever and lose your rear end on some bullshit QOZ real estate scheme they are primarily marketing to doctors. Makes sense. Near as I can tell, the QOZ things are basically done anyway. They mattered if you got in while property values were low. I have a credible financial planner that does fee based stuff. I may just work them and revise my plan to balance stuff for now. I’m having a hard time reasoning out the 1%. The friends that have them seem happy enough - esp re: tax and estate planning. Can’t tell how much of that I will actively care about to that level.
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Apr 2, 2023 20:33
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rufius posted:I’m having a hard time reasoning out the 1%. The friends that have them seem happy enough - esp re: tax and estate planning. Can’t tell how much of that I will actively care about to that level. Why would you pay someone a percentage of your portfolio for tax planning or estate planning? I pay a CPA and a lawyer by the hour for those things.
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Apr 2, 2023 20:37
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Motronic posted:Why would you pay someone a percentage of your portfolio for tax planning or estate planning? I pay a CPA and a lawyer by the hour for those things. The root of my question originally. The thing I haven’t figured out is why people buy in. I assume because it’s hard (effort) and they want it abstracted away? Anyway - I was pretty sure what answer I would get from the thread but I wanted confirmation that my instincts remain largely accurate.
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Apr 2, 2023 20:42
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I also think most people who are "happy with their current financial advisors" are people who don't know what the alternatives are, and don't know they're getting fleeced on fees. If they knew they could self-direct with barely any effort and with better results AND lower fees, they might not be so happy with their current financial advisors anymore.
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Apr 2, 2023 20:50
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So for a more targeted question - how do folks do tax loss harvesting? I used to use a roboadvisor that would do it for me for like $400/year. They upped the fee so I cancelled. I get the general mechanism, just curious if anyone adheres to some methodology or if they just wing it?
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Apr 2, 2023 21:00
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rufius posted:So for a more targeted question - how do folks do tax loss harvesting? I used to use a roboadvisor that would do it for me for like $400/year. They upped the fee so I cancelled. I have a similar-ish question. I recently realized about $5,000 worth of losses. I understand TLH in theory, but this will be my first time realizing any significant amount of losses. How does carrying over tax losses into the next tax year work?
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Apr 2, 2023 21:23
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rufius posted:So for a more targeted question - how do folks do tax loss harvesting? I used to use a roboadvisor that would do it for me for like $400/year. They upped the fee so I cancelled. The tldr version is: You sell things that are below cost basis and reinvest them in similarly correlated assets (or different ones if you're rebalancing) to not trigger the wash rule. Make sure you don't go below -$3,000 in total losses for the year. Most brokers should sell lots on a tax advantaged basis by default, meaning they sell in the order of (biggest loss on a cost basis) --> (biggest profit) The classic "clever" example is to sell SPY and buy VOO or vice versa-- although in an audit the IRS would probably argue that's disallowed losses under wash rules. However, I've heard that everyone basically goes by the rule of "different CUSIP, not a wash trade" so... Not legal advice and all that. But even if you didn't want to be as brazen as SPY <==> VOO, something like VOO <==> VTSAX is totally in the clear for wash rules and they are historically correlated within 1-2% over a year or two.
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Apr 2, 2023 21:25
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rufius posted:So for a more targeted question - how do folks do tax loss harvesting? I used to use a roboadvisor that would do it for me for like $400/year. They upped the fee so I cancelled. My main buys happen every quarter or so, and I reevaluate existing purchase traunches around the same time. I've cycled between some combo of VTI, ITOT, SCHB, SCHK, and uhh...FZROX. I've gone through the exercise a few times. It gets finicky with dividend reinvestments and honestly I might cut back on reviewing, similar to how I've cut back on credit card churning. But my ROI on time has changed materially over the past few years. The $3k net annual limit isn't necessarily a reason to stop because you can carry losses forward indefinitely. And eventually, you'll likely have some gains that would benefit from being offset.
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Apr 2, 2023 21:42
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CubicalSucrose posted:My main buys happen every quarter or so, and I reevaluate existing purchase traunches around the same time. I've cycled between some combo of VTI, ITOT, SCHB, SCHK, and uhh...FZROX. How do you track net losses over multiple tax years, just track everything in Excel? Can you choose not to utilize losses some years, or do you have to do the full amount each year until it runs out?
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Apr 2, 2023 21:56
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literally this big posted:How do you track net losses over multiple tax years, just track everything in Excel? Can you choose not to utilize losses some years, or do you have to do the full amount each year until it runs out? Ya this is my big question... mostly how do I know? Or is it a game of "stitch together these 7 years of tax documents to verify the current tax loss state"?
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Apr 2, 2023 22:32
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rufius posted:So for a more targeted question - how do folks do tax loss harvesting? I used to use a roboadvisor that would do it for me for like $400/year. They upped the fee so I cancelled. rufius posted:Ya this is my big question... mostly how do I know? Or is it a game of "stitch together these 7 years of tax documents to verify the current tax loss state"? literally this big posted:How do you track net losses over multiple tax years, just track everything in Excel? Can you choose not to utilize losses some years, or do you have to do the full amount each year until it runs out? I do similar to what others have posted: my taxable brokerage autobuys cycle between VTSAX/VFIAX/VTIAX. Whenever the market takes a dump, I look at which lots have losses/I bought a while ago and sell/convert them. Sometimes I just sell VTSAX and buy VFIAX. Sometimes it's the opposite. As for tracking losses, your brokerage should make it pretty easy and show you your losses on the 1099 they send you for the year. I use taxhawk for filing my taxes which carries over losses from the previous year if applicable. I'm sure Turbotax/Taxact do the same thing. With last year's shenanigans I ended up with 40k in losses, so I should be good for a long time.
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Apr 2, 2023 22:48
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literally this big posted:How do you track net losses over multiple tax years, just track everything in Excel? Can you choose not to utilize losses some years, or do you have to do the full amount each year until it runs out? That's what I pay my CPA like $300/year to figure out when I send like 50 pages of nonsense their way. I think there's a box on one of the tax forms that tracks how much in losses you've still got. Looks like 1040 schedule D part 1 line 6 and part 2 line 14, for example. Probably some more places for some more info.
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Apr 3, 2023 00:59
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Freetaxusa will carry them over for you
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Apr 3, 2023 05:36
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(not a scam)
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Apr 3, 2023 05:49
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ranbo das posted:Freetaxusa will carry them over for you Glad to hear that, I was wondering because I didn't see anything about it this time around, but it must only come up if the 3k isn't already maxed out for the year. Something that helped me TLH that hasn't been mentioned is push notifications for price drops of the ETF versions of the funds I own. I don't really pay attention to the market otherwise, so it's my way of knowing I should check Vanguard before market close.
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Apr 3, 2023 07:03
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rufius posted:The thing I haven’t figured out is why people buy in. I assume because it’s hard (effort) and they want it abstracted away? Perhaps they are anxious about losing their wad, and don't trust themselves to decipher the finer points of Motronic posted:... and feel, right or wrong, they have found a way to buy themselves a margin of safety. I agree with the feedback here, that it's probably not a great way to go. Educating yourself and learning to use professionals is not that bad. It can be scary though, what if you gently caress up?
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Apr 3, 2023 20:21
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e: took it to tax thread
Henrik Zetterberg fucked around with this message at 06:48 on Apr 4, 2023 |
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Apr 4, 2023 05:48
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interesting chart from JPM
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Apr 4, 2023 18:57
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Music to my ears: https://twitter.com/IfBooksPod/status/1643963486769418240?t=RhIu3lqE6RdUEj-ZegLzAw&s=19
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Apr 6, 2023 17:29
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If I want to open a 529, I can choose whatever state I want to right? I live outside of the US but want to start saving some money for my young kids (like $50/month). I was thinking of just opening a normal brokerage account in their names, but I saw that starting next year a 529 can eventually be backdoored into a Roth IRA which is better than what I'd get with a normal taxable account. It would also not make my US taxes any more complicated. So can I just choose whatever state offers the best plans? (Due to living abroad (FTCs cover my US tax liability), I can't really benefit from tax deductible contributions).
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Apr 6, 2023 17:30
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Are you going to continue to live abroad for the long term? If no, and you have a specific landing place in mind, it may make sense for you to open one in a specific state for future tax benefits - but they're only about a couple hundred bucks in state tax benefits on an annual basis so assuming you contribute for 18 odd years you're not missing out on a tremendous amount of benefit. Otherwise you can just pick whatever one you want. I seem to recall that New Hampshire's was desirable but I'm going off memory.
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Apr 6, 2023 18:58
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Hello thread. What would y'all say is the value or benefit of paying off a car loan early? Currently I can save cash at around the same rate as the loan interest rate. I feel like I'd rather save up an ever-growing amount of liquid cash dedicated towards the loan (which would cover more and more monthly payments as it grows) than pay extra monthly. If I am comfortable with the current terms of the loan, is there anything more to it than saving some % on interest and a 'sense of ownership' in paying off the loan early?
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Apr 7, 2023 23:34
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literally this big posted:Hello thread. What would y'all say is the value or benefit of paying off a car loan early? Currently I can save cash at around the same rate as the loan interest rate. I feel like I'd rather save up an ever-growing amount of liquid cash dedicated towards the loan (which would cover more and more monthly payments as it grows) than pay extra monthly. If you're really dead even or close on interest paid vs. what you're making on the money you save you're coming out ahead because liquidity is always better than truck equity.
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Apr 8, 2023 00:18
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literally this big posted:Hello thread. What would y'all say is the value or benefit of paying off a car loan early? Currently I can save cash at around the same rate as the loan interest rate. I feel like I'd rather save up an ever-growing amount of liquid cash dedicated towards the loan (which would cover more and more monthly payments as it grows) than pay extra monthly. Whats the interest rate on the loan? If its less than say, 4.5% I cant see why you'd pay extra into it as opposed to buying Tbills or something. Also strongly agree that cash liquidity is better than truck equity
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Apr 8, 2023 00:42
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you will need to take into account taxes on interested earned, right?
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Apr 8, 2023 00:44
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literally this big posted:Hello thread. What would y'all say is the value or benefit of paying off a car loan early? Currently I can save cash at around the same rate as the loan interest rate. I feel like I'd rather save up an ever-growing amount of liquid cash dedicated towards the loan (which would cover more and more monthly payments as it grows) than pay extra monthly. Theoretically you have to pay taxes on any interest you gain, whereas if you pay off the car early there is no tax impact. So paying off debt is tax advantaged versus getting that same interest rate in a bank. Realistically car loans aren't very long-term so if the rates are at all close, having the cash on hand is better than locking it up in your car. This isn't the case with houses, since you may be itemizing and get a mortgage interest deduction (which puts earning interest and paying off the mortgage at the same level)
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Apr 8, 2023 00:48
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GenJoe posted:you will need to take into account taxes on interested earned, right? Yes, though at least in the case of Tbills, there is no state tax. Treasury yields in the 3-6 month range were around 5% today.
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Apr 8, 2023 00:57
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To confirm... what is the call this Wednesday on buying I-Bonds or not? We're at 6.89% now, stars are pointing towards that composite yield dropping as I understand it. But, I could also be completely incorrect.
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Apr 10, 2023 20:20
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movax posted:To confirm... what is the call this Wednesday on buying I-Bonds or not? We're at 6.89% now, stars are pointing towards that composite yield dropping as I understand it. But, I could also be completely incorrect. Well, the actual call should wait until Wednesday when we know the exact rate, but yeah, the inflation adjusted rate will almost definitely drop. It was looking likely that the fixed rate would be going up, going by the (reasonable) theory that it follows the TIPS rate, but the TIPS rate took a bit of a dive after the Silicon Valley Bank incident so that's less clear now. It might still go up but less, or if they base it on the older TIPS rate it might go up a good bit. And even if it goes up less, since it pays based on accumulated value you have to weigh on if a higher fixed rate on $10,000 (or whatever) is better than the current .4% of $10,000 + six months of 6.89% interest. My guess would be 3.5% for the variable rate and .6% for the fixed rate, but mainly that's just me making a guess so I can act smug if I'm right.
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Apr 10, 2023 20:38
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Bremen posted:My guess would be 3.5% for the variable rate and .6% for the fixed rate, but mainly that's just me making a guess so I can act smug if I'm right. My hot take is 3.2% variable and 0.2% fixed. So far we have 2.7% of the 3.2% variable on the books (so, an extra 0.25% inflation for March). My guess is a cut in fixed rates since 30 year nominal yields are down vs 6 months ago.
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Apr 10, 2023 20:56
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