Author Topic: Borrow $10K from taxable account and pay it back in one week?  (Read 3462 times)

hiker_girl

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Borrow $10K from taxable account and pay it back in one week?
« on: February 16, 2017, 04:39:47 PM »
Is it possible to borrow $10K from a taxable account and then pay it back within a week? Will it incur capital gains taxes?

I had to make a huge credit card purchase for work (I was out of the country and they required a physical credit card for the transaction).  My company will reimburse it, but it will take 10 business days. My credit card payment is due in 9 business days.

I already used up my emergency fund to pay for part of the $25K debt. There is still $10K to go.


ritz

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #1 on: February 16, 2017, 04:50:19 PM »
Find someone at your company to get you your reimbursement faster! Start with your boss and work up from there if she can't get authorization. $25,000 is an insane amount of money to ask an employee to pay for something up front.

Ann

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #2 on: February 16, 2017, 05:01:06 PM »
Agreed about working to push it through your company faster.  And keep in mind that some banks have a 10 day waiting period on checks >$5,000 or something.  Maybe yours doesn't, but you should check if your company is going to reimburse you by check -- so you may need some other form.  The company needed this purchase, and they are not taking care of you.

Paul der Krake

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #3 on: February 16, 2017, 05:01:44 PM »
edit: nevermind, misread the problem
« Last Edit: February 16, 2017, 05:58:46 PM by Paul der Krake »

hiker_girl

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #4 on: February 16, 2017, 05:28:59 PM »
They are trying to expedite it but I wanted to know what my worst-case scenario options are.

Another idea is to take it out of my Roth IRA contributions.  When my company's reimbursement arrives, repay the $5500 (limit for 2017) and invest the 4500 into my taxable account.


ritz

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #5 on: February 16, 2017, 05:40:28 PM »
Don't take the money out of your Roth. You can't put back the money for prior years. Worst case scenario? Pay the remaining balance of your credit card a couple of days late and insist that the company reimburse you for the interest expense. Seriously, this is their problem, not yours.

JLee

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #6 on: February 16, 2017, 05:48:49 PM »
How long ago did you make this credit card transaction?

hiker_girl

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #7 on: February 16, 2017, 06:26:26 PM »
@JLee - The transaction was on Feb 8 - the statement's closing date.

Some good news - it turns out that my automatic payment was scheduled for March 1, but the actual due date is March 6. I spoke with my credit card company and they moved my automatic payment date to March 6, which gives me a couple of days of breathing room.

Since I have already paid the minimum (much more, in fact) there won't be a late fee. If my reimbursement is late, I will incur some interest fees, which I can ask my company to reimburse. However, since I won't be more than 30 days late in paying off the balance, it won't affect my credit score.

Funny how much I'm learning about the credit card game. I've always paid it off on time so I never had to worry about carrying a balance, or fees or interest.  :)




Hargrove

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #8 on: February 16, 2017, 07:00:21 PM »
Trying to expedite it...?

You must be really polite if a conversation about spending 25k on your own credit for a company emergency resulted in HR/your boss responding that they would "try to expedite it."

How did they not guarantee this to you before you swiped a card for a new BMW?

https://creditcards.chase.com/credit-cards/home/ has a 0% transfer with no fee.

With This Herring

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #9 on: February 16, 2017, 08:35:59 PM »
Wow.  I can't see lending $25K to an employer like that.  $25K is not an incidental expense.  For an amount this large, the company should have given you a company card, a certified check, or something instead of having you pay this expense up front.

I don't even have $25K of CC space...

NoStacheOhio

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #10 on: February 17, 2017, 07:01:21 AM »
Wow.  I can't see lending $25K to an employer like that.  $25K is not an incidental expense.  For an amount this large, the company should have given you a company card, a certified check, or something instead of having you pay this expense up front.

I don't even have $25K of CC space...

I have to ask, what the hell did OP need to buy for $25k+?!

nobody123

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #11 on: February 17, 2017, 08:10:05 AM »
It sounds like you've already paid the minimum, so there won't be a late fee and you're credit won't get dinged.  I would push the company to expedite the check to you, and pay the card off in full once the check clears (no matter how much extra you have to pay to get the balance to zero).  Then, submit the interest charge on the next statement as an expense and have the company reimburse you for it.

Hopefully you're at least getting some CC rewards for your hassle.

shotgunwilly

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #12 on: February 17, 2017, 08:39:16 AM »
I wouldn't bother trying to get money out of retirement accounts for paying for this.

Even if the company didn't get the reimbursement to you in time, and you paid just the minimum on the card for this cycle and the $10,000 got rolled over to the next bill, $10,000 at say 15% interest is going to cost you like $4 a day.  If you go over a day or two, who cares?  That is a small price to pay for not dealing with getting money out of your retirement accounts.

If it DID end up costing you alot of interest, I wouldn't relent until my company reimbursed the INTEREST also.


hiker_girl

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #13 on: March 10, 2017, 02:36:54 PM »
Update: My company paid me back on time. I did not use any other sources of funds. Thanks for everyone's help! 

Ann

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #14 on: March 10, 2017, 02:47:28 PM »
Thanks for the up-date!  Glad it worked out.

Pylortes

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #15 on: March 10, 2017, 03:05:26 PM »
I feel the need to jump into this thread (even though its now moot) because I don't see that anyone actually answered the original question.   So here goes- you do not get assessed capital gains taxes based on moving funds into/out of a taxable account.  Capital gains taxes are imposed only if you sell a stock/mutual fund for a gain.  So if you happened to have $10k in cash already sitting in the account- you could certainly withdraw that and use however you wanted without a worry of taxes.   If on the other hand you had to sell $10k worth of an index fund/stock that had appreciated in order to raise the $10k, then you would pay capital gains taxes on the profit.  It has nothing to do with the money coming or going from the taxable account (note this answer comes out different when discussing retirement accounts such as IRA's).

cchrissyy

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #16 on: March 10, 2017, 03:21:10 PM »
glad it worked out!

they need to get you a company credit card before there is any chance of this happening again. this is not normal business behavior.

Dicey

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Re: Borrow $10K from taxable account and pay it back in one week?
« Reply #17 on: March 11, 2017, 11:34:05 AM »
I hope to hell you got points or mileage for your trouble.

I'm glad it worked out, but I'm still gonna bitch-slap you a little, because I do not want you to EVER consider touching your taxable investments to assist your employer again! No, NO, NO!!!

Had I seen this earlier, I'd have said to make some kind of payment to make sure it doesn't show late, which you did, yay. Then I'd have said to let your employer pay any interest charges incurred. Paying interest has no effect on your credit score, per se. It's the high utilization that stings just a bit, but paying off a large balance quickly can also help you get a credit line increase afterward. Then you could start selling trade lines and make some extra cash. You might still want to look into this, especially if you've had this account for a few years.