Author Topic: I maxed out my 2014 Roth in a dumb way. Question about filing taxes.  (Read 2149 times)

acoin

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Hi everyone,

Long-time MMM reader here, but this is my first post in the forums. Hoping you intelligent folks can help me out with something.

I just maxed out my 2014 Roth in a dumb way. Last week, I sold some shares from my taxable account and put them into the IRA. (This was a really inefficient way to do it and I will never do it again. I don't know why I thought it was a good idea to contribute to taxable first and then IRA.)

I haven't gotten any updated forms from Vanguard since I did this. How does this change how I would normally file taxes?

Thanks!

terran

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Wouldn't it just mean you have to pay capital gains taxes on any gains from the shares you sold in the taxable account?

You had more earned income that what you've contributed to retirement accounts, right?

MDM

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I just maxed out my 2014 Roth...Last week.

I haven't gotten any updated forms from Vanguard since I did this. How does this change how I would normally file taxes?
Not at all for 2014.

You should keep track of your Roth contributions, and so will Vanguard, but they do not affect your taxes if all you do is contribute.  Unless you qualify for the Saver's Credit, but I'm guessing you don't...?

Because your taxable sale occurred in 2015, you will report it (and Vanguard will send you 1099 forms about it) when you file your 2015 taxes in 2016.
« Last Edit: March 12, 2015, 09:21:52 PM by MDM »

acoin

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Thanks for your help, MDM and terran.

I proceeded as normal with taxes and everything was fine. First time I've ever done something like this after Jan. 31st so I was a bit nervous.

Definitely won't be contributing to taxable before IRA ever again :)

Doulos

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I am confused by this.
It seems like this is a tax loss harvesting opportunity?

- Can you keep money in taxable. 
- Sell something that did really bad this year.
- Move that money to Roth ($5.5k per year, $11k MFJ).
- Then rebalance in such a way as to keep that capital gains loss?

Maybe I am just not seeing it, but it really seems like it to me that this is legit?