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money:taxes [2019/12/02 15:31]
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money:taxes [2020/07/04 12:54] (current)
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 {{:everyday:pasted:20171125-101113.png?600}} {{:everyday:pasted:20171125-101113.png?600}}
  
 +===== RIPC to Roth IRA Conversion =====
 +Doing a manual conversion June 23 of 8K. Should be no tax consequences.
 +
 +Need to write down Roth IRA number in memo field on check when you get it.
 +
 +Unsure about how the contributions will get tracked. Might need to do that manually, or just keep updating the spreadsheet with details.
 +
 +===== 0% APR Credit Cards and Floating Your Tax Payment =====
 +Noodled around on this one back and forth. Most cards have a promotional APR of 0% for 15 months. It's what Warren Buffett / insurance companies do!
 +
 +^ Scenario ^ Outcome ^ Dealbreaker? ^
 +| Normal month | Pay 1% of balance, auto-transfer | I feel like no |
 +| $10K in 0% debt, normal scenario | Make average of 8% on it, so $800 in taxable income a year | Too little money for my sanity |
 +| $50K in 0% debt, normal scenario | Make average of 8% on it, so $4000 in taxable income a year \\ Monthly min payment of $500 | Now we're talking :-D \\ So easily I am swayed... \\ //Yet the amount of work/headache is X 5. Hmm...// |
 +| Lose job with $10K of debt coming due in next 3 months | Sell stocks to cover balance after unemployment | Not so bad with savings |
 +
 +===== Solo 401k =====
 +Useful when self-employed. Allows you to give the full amount (~$50k or whatever) to 401k. However, there's still a "traditional" / elective deferral / "don't pay taxes" limit of the typical 19K. So there's no benefit to trying to do this method as a contractor because Intel now supports the mega backdoor roth. (the same benefit as above)
 ===== Marriage ===== ===== Marriage =====
 ==== Split Income ==== ==== Split Income ====
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 ===== ESPP & RSU Taxes ===== ===== ESPP & RSU Taxes =====
 It's uhh...complicated. Basic reason to care is that for some strange reason, the "income" for these benefits that you receive from your company is counted in your W2 as income, but is **not** reported as an adjusted basis in your official 1099-B documents. So you're double-taxed on that money, first on the W2 income and then on that income as short/long-term capital gains unless you do something about it!  It's uhh...complicated. Basic reason to care is that for some strange reason, the "income" for these benefits that you receive from your company is counted in your W2 as income, but is **not** reported as an adjusted basis in your official 1099-B documents. So you're double-taxed on that money, first on the W2 income and then on that income as short/long-term capital gains unless you do something about it! 
 +  * Interestingly, it seems it's federal law to do it this way m( "Looks like since 2014, brokers are prohibited by IRS (T.D. 9616) from adding the compensation component to the employee cost" https://www.thetaxadviser.com/issues/2016/apr/change-in-cost-basis-reporting-can-result-in-double-counting-of-income.html
  
 It's weird, because on e-trade it knows about the adjusted basis! But for some reason, they don't report it that way on 1099-B!  It's weird, because on e-trade it knows about the adjusted basis! But for some reason, they don't report it that way on 1099-B! 
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   * https://wealthyaccountant.com/2018/11/05/micro-business-and-side-gig-tax-guide/   * https://wealthyaccountant.com/2018/11/05/micro-business-and-side-gig-tax-guide/
   * https://wealthyaccountant.com/2017/04/12/it-pays-to-have-a-hobby/   * https://wealthyaccountant.com/2017/04/12/it-pays-to-have-a-hobby/
 +  * 2018 Tax Cuts and Jobs Act made **hobby** expenses non-deductible. That changes a lot...spend away!
 +<blockquote>Are you a Hobby or business? It makes a difference. A hobby is by far the easiest way to report income. But no expenses are allowed while SE tax is avoided.</blockquote>
 ===== Trust and stuff ===== ===== Trust and stuff =====
 Living Trust lets you avoid probate fees. Need a piece of paper, with community property agreement. Living Trust lets you avoid probate fees. Need a piece of paper, with community property agreement.
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 ===== Messing with Tax Payment Timing ===== ===== Messing with Tax Payment Timing =====
  
-Side Note:  * You can also pay tax via withholdings at the end of the year and keep your money invested all year. It's considered equally spread out throughout the year, apparently! See https://wealthyaccountant.com/2017/03/22/stop-paying-your-quarterly-estimated-taxes/  +Side Note:   
 +  * You can also pay tax via withholdings at the end of the year and keep your money invested all year. It's considered equally spread out throughout the year, apparently! See https://wealthyaccountant.com/2017/03/22/stop-paying-your-quarterly-estimated-taxes/  
     * Withholdings spread out all year: https://www.irs.gov/instructions/i2210#idm140349202906368     * Withholdings spread out all year: https://www.irs.gov/instructions/i2210#idm140349202906368
 <blockquote>When figuring your payment dates and the amounts to enter on line 19 of each column, apply the following rules.  <blockquote>When figuring your payment dates and the amounts to enter on line 19 of each column, apply the following rules. 
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 "Cool spreadsheet man" "Cool spreadsheet man"
  
-2% max fee. Have to spread it out among vendorshttps://frequentmiler.boardingarea.com/2018/02/19/pay-taxes-via-credit-card-2018-edition/+2% max fee. **Can** spread it out among vendorshttps://frequentmiler.boardingarea.com/2018/02/19/pay-taxes-via-credit-card-2018-edition/ 
 + 
 +=== Debit Cards === 
 +Also an option. Flat ~$2.50 fee, and some cards give you 1% or more back. 
 + 
 +Buying debit gift cards probably not so much, since the limit is $500 and they have a $5 fee to open, etc. Unless you can buy them for 5% off at a grocery store. Not willing to do the work :)
  
 === Allowances === === Allowances ===
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   * IRS questions, based on https://money.stackexchange.com/questions/7714/how-can-i-make-four-equal-quarterly-tax-payments-when-i-dont-know-what-my-inc:   * IRS questions, based on https://money.stackexchange.com/questions/7714/how-can-i-make-four-equal-quarterly-tax-payments-when-i-dont-know-what-my-inc:
     * <del>Can I pre-pay the next quarter? Or do I have to do schedule AI, etc?</del> Don't worry about it! Just pay in March 15 and after April 15 (next quarter). Still counts for paying each month and fits in CC 3 month window. Done.      * <del>Can I pre-pay the next quarter? Or do I have to do schedule AI, etc?</del> Don't worry about it! Just pay in March 15 and after April 15 (next quarter). Still counts for paying each month and fits in CC 3 month window. Done. 
 +
 +=== Via Debit Card ===
 +For when you don't have a credit card bonus to use...Can pay Federal for $2.59 on a debit card, and some debit cards (M1 Finance in particular) give you 1% back! Awesome.
 +
 +Oregon says it's $2.59, but they charge you 1.8% or whatever, so can't do it that way.
  
 ===== Tax Loss Harvesting ===== ===== Tax Loss Harvesting =====
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 ===== 529 Plan ===== ===== 529 Plan =====
 Have to pay federal income tax, but don't have to pay Oregon income tax for up to $2330 of it. Have to pay federal income tax, but don't have to pay Oregon income tax for up to $2330 of it.
 +
 +Earnings grow tax-free when used for qualified educational expenses.
 +
 +=== 2020+ ===
 +$150 tax credit, reached when contributing $600 for my tax bracket. Just doing $1K.
  
 === 2018 === === 2018 ===
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 ==== Older stuff ==== ==== Older stuff ====
-Can do a Traditional to Roth IRA conversion "ladder". You pay taxes on the amount converted (low in a low-income situation) and you have to wait 5 years to touch the converted money, but then you can withdraw it early tax-free. +Can do a Traditional to Roth IRA conversion "ladder". You pay taxes on the amount converted (low in a low-income situation) and you have to wait 5 years to touch the converted money, but then you can withdraw the contributions early tax-free. 
-  * From: https://www.madfientist.com/how-to-access-retirement-funds-early/+  * From: https://www.kitces.com/blog/understanding-the-two-5-year-rules-for-roth-ira-contributions-and-conversions/ and https://www.madfientist.com/how-to-access-retirement-funds-early/
 +    * Kitces clarified, does *not* mean you can access Roth IRA earnings penalty free, as you still need to be over 59.5. 
  
 === Backdoor Roth IRA === === Backdoor Roth IRA ===
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 ==== Roth In Plan Conversion ==== ==== Roth In Plan Conversion ====
 +
 +=== Notes from Inside Blue ===
 +<blockquote>After-tax contributions will be stopped at the IRS annual additions limit ($57,000, or $63,500 if age 50+ for 2020) if the sum of your year-to-date pre-tax/Roth contributions, the year-to-date pay-period 401(k) match, and your year-to-date after-tax contributions reach that limit during the plan year.  Your pre-tax/Roth 401(k) contributions and the applicable pay-period 401(k) match will continue until you have reached IRS limits for those items ($19,500, or $26,000 if age 50+ for 2020 for your pre-tax/Roth 401(k) contributions).  </blockquote>
 +
 +
 +https://intel.usretirementchanges.com/1-learn-about-the-changes/401k-after-tax-contributions-and-roth-in-plan-conversion
 +
 +<blockquote>I just talked to Fidelity today about after-tax conversion.  They told me I have 2 choices. 
 +One is in-plan conversion from after tax to Roth, the money will still be under my 401K savings plan but just show as Roth, and I will have to choose from core investment options.  After my call, Fidelity will automatically convert my after-tax to Roth each time they received my contribution. 
 +
 +Another choice is to roll over my after-tax to another Roth IRA, then I have more investment options.  The roll over can't be set to happen automatically, I will have to call each time I received a paycheck with after-tax deductions, but there's no limit on how many times and how much per year I can roll over my after-tax.
 +
 +I was also told if I do in-plan conversion, I will not be able to withdraw from converted Roth money before 59.5 years old and while I am still working.  If I do roll over, I can withdraw from converted Roth money early, but may have penalties and tax consequences.
 +</blockquote>
 +
 +<blockquote>Nolan,
 +
 +Your 401k contributions will automatically be stopped when you hit the IRS limit ($19,500 in your case). You will not need to change any elections for this to take place.
 +
 +What will not stop is the after-tax contribution.
 +
 +The IRS maximum of all contributions combined (401k + Intel match + after-tax) is $57,000 for 2020.
 +
 +You will need to figure out how much you will be able to contribute to after-tax without going over that limit.
 +
 +If you are trying to contribute to pre-tax 401k up to $19,500 max and then start contributing to after-tax, you will need to adjust your after-tax contribution % once you hit the pre-tax max.
 +
 +Using a hypothetical eligible earnings of $150,000, you would be able to contribute $57,000 - $19,500 - $7,500 = $30,000 in after-tax money.
 +
 +Hope this helps.</blockquote>
 +
 +<blockquote>Good question! The exact information needed to determine how much after-tax contributions you can make will not be available until after the plan year ends (primarily due to the 401(k) match true-up), so estimates are required. After-tax contributions will be stopped at the IRS annual additions limit ($56,000, or $62,000 if age 50+ for 2019) if the sum of your year-to-date pre-tax/Roth contributions, the year-to-date pay-period 401(k) match, and your year-to-date after-tax contributions reach that limit during the plan year.  Your pre-tax/Roth 401(k) contributions and the applicable pay-period 401(k) match will continue until you have reach IRS limits for those items ($19,000, or $25,000 if age 50+ for 2019 for your pre-tax/Roth 401(k) contributions).  If it is determined after the match true-up is calculated that contributions were made in excess of the IRS annual additions limit, there is an annual process to refund the excess amounts. You should also be aware that non-discrimination testing could result in a reduction of permissible after-tax contributions.  If this happens, excess amounts will be refunded.
 +
 +To estimate your potential after-tax contribution maximum, you need to start with the IRS annual additions limit (above) and subtract your anticipated pre-tax/after tax contributions (max $19,000, or $25,000 if age 50+ for 2019), estimated match (maximum 2:1 on pre-tax/Roth contributions up to 5% of eligible pay). What is left is your estimated potential after-tax contribution. Because your regular pay and/or bonus exact amounts are not known in advance, your after-tax deferral election for regular pay and/or bonus requires you to make your best estimate.  If you have a financial advisor, consider engaging them to help with your estimate.</blockquote>
 +=== Notes from Fidelity RIPC setup ===
 +
 +
 +
 +
 +
 +Intel doesn't automatically switch 
 +
 +What is the VAC/PA CASH OUT PRE-TAX thing?
 +
 +Roth Basic, is the normal Roth 401k money. But Intel doesn't allow withdrawal until 59.5
 +
 +
 +Roth In-Plan Conversion withdrawal is allowed, however.
 +  * If going to an external account, they will need to liquidate the funds, but they do send a notice of the cost basis along with the check.
 +
 +
 +How will it switch over from Traditional 401k at 19K to RIPC?
 +  * Fidelity rep says that they could do it, but Intel is doing it themselves and it says Intel won't stop me at the deferral limit.
 +
 +Set up transfer to external Roth IRA? (M1 finance). Is it difficult, or should I just not bother with it?
 +  * Allows easy automatic purchasing of ETF and stocks in fractional amounts. Fidelity would limit to just mutual funds
 +
 +=== Others ===
 It's the 401k "mega backdoor" roth.  It's the 401k "mega backdoor" roth. 
  
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 Make a calendar reminder to recompute in the summer after you contributed to 401k. Make a calendar reminder to recompute in the summer after you contributed to 401k.
 +==== 2020 ====
 +=== Estimated Payments ===
 +
 +
 +**Payment + Fee = Minimum Spend** --> **Spend/1.02 = Payment (includes fee)**
 +
 +**Should deduct expected W2 tax withholdings too...**. Was over Federal 2019 return by $5K and Oregon by $4k.
 +^ ^ Federal ^ Oregon ^
 +| Total 2019 | $15000 | <del>$7000</del>, $7644? |
 +| Quarterly | $3750 | <del>$1750</del> $1911 guess | 
 +| Apr 15 \\ Need to pay $2678 w/ cash, rest w/ CC' | $250 w/ Delta Amex on Pay1040 \\ Due July 15 [[https://www.irs.gov/newsroom/payment-deadline-extended-to-july-15-2020|here]] | 62 paid already using alliant CC \\ $171 with work bonus debit \\ 979 on PNC CC, 699 on BBVA CC \\ [[https://www.oregon.gov/newsroom/Pages/NewsDetail.aspx?newsid=36265|Oregon is not extended]]|
 +| Jun/Jul 15 | [[https://www.irs.gov/newsroom/irs-extends-more-tax-deadlines-to-cover-individuals-trusts-estates-corporations-and-others|Extended to July 15]] \\ Paid $142.50 from Wirecard June 18 on PayUSATax website \\ $2000 off of Sofi Debit on Pay1040 on June 22 \\ $2997.42 via Pay1040 and Discover Card \\ 2850 via PayUSATax and Discover on July 2 | Paid $2000 via checking on June 9 |
 +| Sep 15 | | | 
 +| Jan 15 | | |
 +
 +<del>Pay on PNC</del> (2% fee). Rather get a new card, do auto-transfer of minimum payments and get 0% APR? \\ $10K credit limit, 0% until July 2021
 +
 +=== Donations ===
 +$50 Feb 4 for West Valley trip
 +$785 Mar 28 for Kickstart.
 +
 +=== TLH ===
 +Sold $18K of VOO ($3K of short term losses) for VTI on April 6. Will increase VTI allocation to ensure incoming money doesn't go into VOO.
 +
 +Turned off auto invest for Roth IRA and taxable account, just in case. Only need to worry about wash sale for VOO.
 +
 +Did a number of stock sales on Robinhood in June in anticipation of buying car and finishing LTCG.
  
 ==== 2019 ==== ==== 2019 ====
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 Get W2 box 1 and box 5 breakdown from Workday. Workday -> Pay -> My W2 Breakdown. Also helpful is printing out the last payslip to make sure Oregon withholdings are correct (Oregon WBF and Transit Tax). Get W2 box 1 and box 5 breakdown from Workday. Workday -> Pay -> My W2 Breakdown. Also helpful is printing out the last payslip to make sure Oregon withholdings are correct (Oregon WBF and Transit Tax).
 +
 +Make sure that the 1099's from the banks match what you expected for signup bonus income.
 +
 +=== 1099's ===
 +
 +Bonuses:
 +
 +^ Expected ^ Received ^
 +| Chase checking/savings and brokerage | X, brokerage X |
 +| SoFi Invest (probably under apex) | |
 +| ETrade | X |
 +| Ally Bank Trading | X |
 +| PNC | |
 +| HSBC (200) | X |
 +| US Bank (250) | X |
 +| Wells Fargo ($400) | X |
 +| Capital One Savings | X |
 +| Discover Savings (<del>$200?</del> $150) | X |
 +What about small interest? :-( -> :-) (less than $10 interest is not reported to IRS!)
 +| Bank of the West | |
 +| Homestreet Bank | |
 +| Columbia Bank | |
 +| KeyBank | |
 +| Citi | |
 +| Charles Schwab | |
 +| NW Priority? | |
 +| Alliant | N/A |
 +| First Tech | N/A |
 +
 +Normal:
 +^ Expected ^ Received ^
 +| Vanguard | X |
 +| M1 Finance | X |
 +| Robinhood | X |
 +| ETrade | X |
 +
 +
 +
  
 === Donations === === Donations ===
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 | Jun 15 | Done (Pay1040) 1.87% | Done June 7 | | Jun 15 | Done (Pay1040) 1.87% | Done June 7 |
 | Sep 15 | 696 out of $3750 Jul 8. \\ Paid 4418 on Aug. 6 \\ for travel expenses | Done Jul 8. 1792 total.|  | Sep 15 | 696 out of $3750 Jul 8. \\ Paid 4418 on Aug. 6 \\ for travel expenses | Done Jul 8. 1792 total.| 
-| Jan 15 | $1364 / $3750 already paid \\ $1261 on Wells Fargo\\Need to add ~$2K of LTCG payments for signup bonuses | |+| Jan 15 | $1354 / $3750 already paid \\ $1261 on Wells Fargo\\ Need to add $1446 (LTCG) + $300 (income) for signup bonuses \\ $2881 required. \\ $2881 paid + $53 fee on Alliant CC  $1750 + $954 (LTCG) + $75 (income) \\ Paid $879 on Fidelity. \\ $1900 even remaining \\ Paid with checking transfer |
  
 === Nov 2019 Capital Gain and Interest Calculation === === Nov 2019 Capital Gain and Interest Calculation ===
 Not necessarily the best idea to pay $2K in taxes to gain $1K in brokerage opening fees, but I do get some capital losses on the way back down... Not necessarily the best idea to pay $2K in taxes to gain $1K in brokerage opening fees, but I do get some capital losses on the way back down...
 +
  
 Vanguard: Vanguard:
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   * $2314.27 in LTCG in Nov 2019. $347.15   * $2314.27 in LTCG in Nov 2019. $347.15
   * $55.24 in net STCG, at 40% marginal tax = $22.10   * $55.24 in net STCG, at 40% marginal tax = $22.10
 +
 +$9643 in Nov 2019 LTCG. For Fed at 15% it's $1446, for OR it's 9.9% income tax so: $954. Both are DONE!
 +
  
 Checking account signup bonuses: Checking account signup bonuses:
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   * Q3 HSBC: $200   * Q3 HSBC: $200
   * Q4 Chase: $600   * Q4 Chase: $600
 +  * Q4 Discover: $150
  
-Pay Q3 with withholding ($900 * .4 = $360). +Pay Q3 with withholding ($900 * .4 = $360). DONE! 
-Pay Q4 with CC: ($600 * .4 = $240)+Pay Q4 with CC: ($750 * .4 = $300). DONE!
  
 // Technically .4 amount includes federal and state income tax and done the same below, but whatevs.// // Technically .4 amount includes federal and state income tax and done the same below, but whatevs.//
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 Setting Federal withholdings in december 1 to be 10. Used to be 28, need 12 minimum delta for $500 bi-weekly withholding according to https://turbotax.intuit.com/tax-tips/tax-refund/fatten-your-paycheck-and-still-get-a-tax-refund/L5HaySdDP. So only technically need 16, but going to 10 in case things are off. Setting Federal withholdings in december 1 to be 10. Used to be 28, need 12 minimum delta for $500 bi-weekly withholding according to https://turbotax.intuit.com/tax-tips/tax-refund/fatten-your-paycheck-and-still-get-a-tax-refund/L5HaySdDP. So only technically need 16, but going to 10 in case things are off.
   * Setting state from 38 to 10 as well. Would rather overdo rather than underdo.   * Setting state from 38 to 10 as well. Would rather overdo rather than underdo.
-  * +  * $285.65 withheld on Dec 15 for Federal. Do once more, that should be good.
  
 ==== 2018 ==== ==== 2018 ====
money/taxes.1575329495.txt.gz · Last modified: 2019/12/02 15:31 by admin