Author Topic: Savings/investments/bonds Master Thread.  (Read 185670 times)

Offline ExGingi

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Re: Savings/investments/bonds Master Thread.
« Reply #540 on: February 22, 2023, 03:34:34 PM »
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
« Last Edit: February 22, 2023, 03:54:17 PM by ExGingi »
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Offline meshugener

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Re: Savings/investments/bonds Master Thread.
« Reply #541 on: February 22, 2023, 03:55:13 PM »
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.
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Offline jfish227

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Re: Savings/investments/bonds Master Thread.
« Reply #542 on: February 22, 2023, 03:58:45 PM »

Offline CountValentine

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Re: Savings/investments/bonds Master Thread.
« Reply #543 on: February 22, 2023, 04:02:09 PM »
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.
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Offline sillypainter

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Re: Savings/investments/bonds Master Thread.
« Reply #544 on: February 22, 2023, 04:07:49 PM »
This is correct.

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

Offline gozalim

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Re: Savings/investments/bonds Master Thread.
« Reply #545 on: February 22, 2023, 04:59:35 PM »
You were one of the first - and you deserve the best.

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Hmmm
I applied 2/13, finally approved now
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any hope?

Offline CountValentine

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Re: Savings/investments/bonds Master Thread.
« Reply #546 on: February 22, 2023, 05:45:29 PM »
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.
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Offline Joe4007

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Re: Savings/investments/bonds Master Thread.
« Reply #547 on: February 22, 2023, 06:08:40 PM »
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. 

Offline CountValentine

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Re: Savings/investments/bonds Master Thread.
« Reply #548 on: February 22, 2023, 06:15:05 PM »

Couldn't remember where I saw it.  :)
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Offline ExGingi

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Re: Savings/investments/bonds Master Thread.
« Reply #549 on: February 22, 2023, 08:23:21 PM »
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:

« Last Edit: February 22, 2023, 10:55:14 PM by ExGingi »
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Offline Willie

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Re: Savings/investments/bonds Master Thread.
« Reply #550 on: February 23, 2023, 11:01:32 AM »
besides for primis, any other banks/ places i can have my money liquid and still earn around 5% on it?

Offline dm123

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Re: Savings/investments/bonds Master Thread.
« Reply #551 on: February 23, 2023, 02:56:22 PM »
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/

Online Thingywingy

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Re: Savings/investments/bonds Master Thread.
« Reply #552 on: February 23, 2023, 09:48:14 PM »
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?
I am sometimes accused of overthinking things. I am still mulling over whether that accusation has merit.


Offline dm123

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Re: Savings/investments/bonds Master Thread.
« Reply #554 on: February 24, 2023, 10:48:36 AM »
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

Offline ExGingi

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Re: Savings/investments/bonds Master Thread.
« Reply #555 on: February 24, 2023, 11:13:38 AM »
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?
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Offline CountValentine

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Re: Savings/investments/bonds Master Thread.
« Reply #556 on: February 24, 2023, 11:18:37 AM »
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?
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Offline ExGingi

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Re: Savings/investments/bonds Master Thread.
« Reply #557 on: February 24, 2023, 11:23:34 AM »
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

I've been waiting over 5 years with bated breath for someone to say that!
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Offline CountValentine

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Re: Savings/investments/bonds Master Thread.
« Reply #558 on: February 26, 2023, 06:55:46 PM »
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?
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Offline AsherO

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Re: Savings/investments/bonds Master Thread.
« Reply #559 on: February 26, 2023, 09:15:07 PM »
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.
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