Author Topic: Selling from after tax account, tax question  (Read 603 times)

Highbeam

  • 5 O'Clock Shadow
  • *
  • Posts: 85
Selling from after tax account, tax question
« on: July 24, 2017, 01:57:12 PM »
Folks, I am about to liquidate most of the value of an account that was built for the purpose of paying off my mortgage. I have been contributing to this account over the last couple of years monthly. It's a vanguard account. My questions:

1) Who calculates the gains/profit?
2) Who calculates which portion of this profit is long term vs. short term capital gains?
3) Does vanguard withhold any income taxes when they complete these sales or is it all on me? 

I am aware of the arguments regarding paying off my mortgage and am not looking for advice on that.

Thanks in advance!

oldmannickels

  • 5 O'Clock Shadow
  • *
  • Posts: 90
Re: Selling from after tax account, tax question
« Reply #1 on: July 24, 2017, 02:04:09 PM »
Vanguard should calculate your gains and report and categorize them by term on a 1099-B at year end. They will probably give you some preliminary amounts on the statement after you sell. You will be responsible for withholding the taxes.

Blonde Lawyer

  • Pencil Stache
  • ****
  • Posts: 612
    • My Student Loan Refi Story
Re: Selling from after tax account, tax question
« Reply #2 on: July 24, 2017, 02:15:01 PM »
I'm new to Vanguard but was just on the site.  If you go to "My Accounts" there is a link for "Cost Basis," Dividends and Capital Gains and a tab for Realized Gains and Losses.  You should be able to see it there in real time in addition to at tax time on an official statement.

Highbeam

  • 5 O'Clock Shadow
  • *
  • Posts: 85
Re: Selling from after tax account, tax question
« Reply #3 on: July 24, 2017, 02:22:34 PM »
I'm new to Vanguard but was just on the site.  If you go to "My Accounts" there is a link for "Cost Basis," Dividends and Capital Gains and a tab for Realized Gains and Losses.  You should be able to see it there in real time in addition to at tax time on an official statement.

Wow, that looks great. It looks like I can even toggle between cost basis method to minimize the tax hit.

MDM

  • Walrus Stache
  • *******
  • Posts: 6713
Re: Selling from after tax account, tax question
« Reply #4 on: July 24, 2017, 06:37:35 PM »
I'm new to Vanguard but was just on the site.  If you go to "My Accounts" there is a link for "Cost Basis," Dividends and Capital Gains and a tab for Realized Gains and Losses.  You should be able to see it there in real time in addition to at tax time on an official statement.

Wow, that looks great. It looks like I can even toggle between cost basis method to minimize the tax hit.
Using SpecID for cost basis has no downside and gives you the most flexibility to do what you want.  Ensure that is in place before you sell.

DavidAnnArbor

  • Handlebar Stache
  • *****
  • Posts: 1020
  • Age: 51
  • Location: Ann Arbor, Michigan
Re: Selling from after tax account, tax question
« Reply #5 on: July 25, 2017, 07:55:46 PM »
Yes I used SpecID for costbasis too.

Blonde Lawyer

  • Pencil Stache
  • ****
  • Posts: 612
    • My Student Loan Refi Story
Re: Selling from after tax account, tax question
« Reply #6 on: July 26, 2017, 08:40:21 AM »
I'm new to Vanguard but was just on the site.  If you go to "My Accounts" there is a link for "Cost Basis," Dividends and Capital Gains and a tab for Realized Gains and Losses.  You should be able to see it there in real time in addition to at tax time on an official statement.

Wow, that looks great. It looks like I can even toggle between cost basis method to minimize the tax hit.
Using SpecID for cost basis has no downside and gives you the most flexibility to do what you want.  Ensure that is in place before you sell.

Can you explain this further for us Newbs?

MDM

  • Walrus Stache
  • *******
  • Posts: 6713
Re: Selling from after tax account, tax question
« Reply #7 on: July 26, 2017, 09:22:07 AM »
I'm new to Vanguard but was just on the site.  If you go to "My Accounts" there is a link for "Cost Basis," Dividends and Capital Gains and a tab for Realized Gains and Losses.  You should be able to see it there in real time in addition to at tax time on an official statement.

Wow, that looks great. It looks like I can even toggle between cost basis method to minimize the tax hit.
Using SpecID for cost basis has no downside and gives you the most flexibility to do what you want.  Ensure that is in place before you sell.

Can you explain this further for us Newbs?
Does Vanguard's explanation help? Vanguard cost basis information: Know your options | Vanguard

Blonde Lawyer

  • Pencil Stache
  • ****
  • Posts: 612
    • My Student Loan Refi Story
Re: Selling from after tax account, tax question
« Reply #8 on: July 26, 2017, 10:50:20 AM »
I'm new to Vanguard but was just on the site.  If you go to "My Accounts" there is a link for "Cost Basis," Dividends and Capital Gains and a tab for Realized Gains and Losses.  You should be able to see it there in real time in addition to at tax time on an official statement.

Wow, that looks great. It looks like I can even toggle between cost basis method to minimize the tax hit.
Using SpecID for cost basis has no downside and gives you the most flexibility to do what you want.  Ensure that is in place before you sell.

Can you explain this further for us Newbs?
Does Vanguard's explanation help? Vanguard cost basis information: Know your options | Vanguard

Yes! Thank you!

Highbeam

  • 5 O'Clock Shadow
  • *
  • Posts: 85
Re: Selling from after tax account, tax question
« Reply #9 on: July 26, 2017, 01:01:43 PM »
After reading about the spec ID, I will not be doing that. Yikes! Lots of additional burden on me to keep records. I don't want to keep records like that and risk getting in trouble.

Now I get to play "market timer" and decide when to sell this huge lump of my net worth. Typically winter is good, typically people sell in May and go away, but this bull run has been long and the political climate seems to cause volatility.

After checking my basis on this lump of shares I am pleasantly surprised at how low my tax burden will be even if I sold the shares today.