Savings/investments/bonds Master Thread.

[ExGingi]

The buyer who buys it at 999 is getting no CG or interest at this point. It just doesn't work that way.

I have a feeling that a tax professional or anyone with real-life experience can shed light on this.

My guess is that there's no CG as a 1099-OID would need to be issued, and whoever gets the ultimate form from the Treasury would issue a form to anyone else that would be otherwise liable for a portion. See https://www.irs.gov/pub/irs-pdf/i1040sb.pdf

The T-bills are Zero Coupon, so the discount is the imputed interest.

For an extensive explanation of various scenarios see: https://thismatter.com/money/bonds/bond-income-taxation.htm

[meshugener]

It should be a capital loss of $49 and $50 of interest, but I can see why the IRS wouldn't classify it that way.

This is correct.

[jfish227]

This is correct.

welcome to 2023!

[CountValentine]

Fidelity confirmed if you sell a zero-coupon before maturity it will be reported on a 1099-B. Any zero-coupon bought at auction or on the secondary market held until maturity will be reported on a 1099-INT. They would not comment about the taxability of either.

The only question that remains is the if the amount on the 1099-B is taxable for state/local.

[sillypainter]

This is correct.

Look who is here. Did you forget to sign in with your "other" account?

[gozalim]

You were one of the first - and you deserve the best.

Thanks for being one of the first customers to take advantage of our Primis Premium Checking. You’re earning the top-notch annual percentage yield (APY) of 5.03% and we’re glad you’re here.

Soon, you may see on our website that our APY is changing to 4.35%. This will not apply to you. As an early adopter of our digital platform, you will continue to earn 5.03% APY. While our rates are always subject to change, we want to currently hold your rate at the highest level possible.

Congratulations on being a banking trailblazer. Our goal is to continue to impress you and create a long-standing relationship.

Thank you,
Your Primis Team

Hmmm
I applied 2/13, finally approved now
never got that email...

any hope?

[CountValentine]

So here is an idea. If you are going to have a loss this year or a carryover loss sell your T-bills a day before maturity. Gains will be offset by prior losses.

[Joe4007]

So here is an idea. If you are going to have a loss this year or a carryover loss sell your T-bills a day before maturity. Gains will be offset by prior losses.

Another interesting scenario I can think of is if someone has unused capital losses they'd want to sell treasuries before maturity so that it becomes CG instead of interest. 

[CountValentine]

Couldn't remember where I saw it. 

[ExGingi]

I see what @aygart is saying. If you buy at 950 and sell at 999 and that is considered a CG, not interest, apparently there's something that causes the interest only to be recognized at the end. If that is the case, one would assume the buyer (holder at maturity) would get the full interest on a 1099-INT (since we've established that the brokerage doesn't pro rate the interest) and have a capital loss of $49 since the cost basis was 999 and the proceeds 950 (as 50 is already being attributed to interest).

Also, is the same true for treasury notes? If so, it creates an interesting opportunity to sell before maturity and pay the lower long term CG tax rate instead of ordinary on interest income.

Another interesting scenario I can think of is if someone has unused capital losses they'd want to sell treasuries before maturity so that it becomes CG instead of interest.

Based on the sources I linked to above, this doesn't seem to be correct.

Rather, the correct formula to determine CG vs Interest is:

[Willie]

besides for primis, any other banks/ places i can have my money liquid and still earn around 5% on it?

[dm123]

besides for primis, any other banks/ places i can have my money liquid and still earn around 5% on it?

Looks like Marcus has 4.75% for 3 months (3.75% plus 1% with the referral).

https://www.marcus.com/share/DAN-YN5-QNFH

Otherwise for banks you can always check DOC (looks like highest are 4.5% range now):

https://www.doctorofcredit.com/high-interest-savings-to-get/

[Thingywingy]

Its a bit off topic but seems like the financially inclined in this group might be able to help. Can you reduce your tax awithholding amount by paying the IRS directly?

[Mf1]

7.5 percent for over one year through Deutsch bank. Prob not fdic insured hence more risk =more potential profit
https://lms.deutschebank.co.in/Fixed-Deposit_NRI/html_gradient/nri.html?REFERRER_CODE=google&CREATIVE_CODE=discovery&PRODUCT_CODE=fd-NRI&AGENCY_NAME=Interactive&SOURCE=THIRDPARTY&CAMPAIGN_CODE=IA_FD-NRI-Discovery_ROW_Custom-Intent_InMarket_Remarketing&SECTION_NAME=Custom-Intent&gclid=Cj0KCQiA3eGfBhCeARIsACpJNU9CBuNwC7rqk8L4jJTk5lzDQZEJ55i6UA4VmzgW9_Jdh53bqk5q7ogaAkAQEALw_wcB

[dm123]

Its a bit off topic but seems like the financially inclined in this group might be able to help. Can you reduce your tax awithholding amount by paying the IRS directly?

@Thingywingy I posted and responded on Ask an accountant thread

Any personal/payroll tax accountants know?

Seems the IRS says you have the option of withholding or paying as long as taxes are paid in a timely manner throughout the year it's fine. Of course speak to your accountant to make sure you're paying in the correct amount and the correct tax and verify with your company that they're adjusting your withholding properly.

https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes

[ExGingi]

7.5 percent for over one year through Deutsch bank. Prob not fdic insured hence more risk =more potential profit
https://lms.deutschebank.co.in/Fixed-Deposit_NRI/html_gradient/nri.html?REFERRER_CODE=google&CREATIVE_CODE=discovery&PRODUCT_CODE=fd-NRI&AGENCY_NAME=Interactive&SOURCE=THIRDPARTY&CAMPAIGN_CODE=IA_FD-NRI-Discovery_ROW_Custom-Intent_InMarket_Remarketing&SECTION_NAME=Custom-Intent&gclid=Cj0KCQiA3eGfBhCeARIsACpJNU9CBuNwC7rqk8L4jJTk5lzDQZEJ55i6UA4VmzgW9_Jdh53bqk5q7ogaAkAQEALw_wcB

"Prob not FDIC insured" is all you have to say about it?

Is this even a USD account (or is it an Indian Rupee account)?

Is it available to people outside of India?

What's next? A Turkish bank account? Argentine bank account?

[CountValentine]

What's next? A Turkish bank account? Argentine bank account?

A get emails for Nigerian accounts all the time. You think that would be OK?

[ExGingi]

A get emails for Nigerian accounts all the time. You think that would be OK?

It all depends on what they are offering?

As @Mf1 put it

more risk =more potential profit

/s

[CountValentine]

When to start going longer term with T-bills? My original plan was wait until I start seeing a downturn. That has now changed to wait until the fed calls for no more rate hikes. What are your thoughts?

[AsherO]

7.5 percent for over one year through Deutsch bank. Prob not fdic insured hence more risk =more potential profit
https://lms.deutschebank.co.in/Fixed-Deposit_NRI/html_gradient/nri.html?REFERRER_CODE=google&CREATIVE_CODE=discovery&PRODUCT_CODE=fd-NRI&AGENCY_NAME=Interactive&SOURCE=THIRDPARTY&CAMPAIGN_CODE=IA_FD-NRI-Discovery_ROW_Custom-Intent_InMarket_Remarketing&SECTION_NAME=Custom-Intent&gclid=Cj0KCQiA3eGfBhCeARIsACpJNU9CBuNwC7rqk8L4jJTk5lzDQZEJ55i6UA4VmzgW9_Jdh53bqk5q7ogaAkAQEALw_wcB

7.5% in a foreign currency is meaningless because there are often foreign markets out there with higher interest than the US, but also higher risk (including currency devaluation). If you get 10% APY on a foreign currency account that loses 20% of its value to the dollar, then you’ll end up far behind.

Probably what ExGingi was saying.