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I need a beer.  Beer, beer, beer...here beery beer
Old 02-22-2005, 10:07 PM   #1
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I need a beer.  Beer, beer, beer...here beery beer

Tax time is now concluded.

Our first married filing jointly return. How thrilling! :P

For the first time since ER'ing, I had to pay taxes, but at least the wifes withholding covered the damage and we're getting a little bit back.

Some key learnings:

- It does not really matter if you have your investments spread over hell and earth or at one place. This is my first year where everything was in one place (vanguard). I expected almost push-button ease. Not to be had.

- Do not, I repeat, do not use the vanguard short term bond fund as your faux money-market account. Granted I had a lot of activity in mine because I had dividends paid out to it from all my other funds and then drained it for my regular spending needs. I also used it just like a MM account at a brokerage...putting new money into it and funding investments from there. Upon review of my full transaction loads, almost every single sell generated a small and nearly insignificant loss that in aggregate ate up all the interest I was paid. Further, since about 70% of the sell transactions generated a small loss, they were all subject to the wash sale rule and I had to calculate which 'bucket' the shares came from and how many shares had then been purchased within the 60 day window of that sale. Ay Carumba! Surprisingly, although I have vanguards download and quickens sideslip into turbotax, the program couldnt figure this out on its own. All the numbers were there, readily available. Apparently Intuit spent so much time figuring out how to shoehorn offers for $19.95 for Its Deductible! and other various and sundry extras that they forgot to build in useful functionality to the program.

- When you've done your investment downloads and are mired in doing extensive wash-sale calculations, do not, I repeat: do not decide that it might be a good idea to do an import from quicken to see if that provides any of this info. That created duplicate transactions for all my 1099-div and 1099-B entries. I then had to figure out which ones were good and which werent by printing out the schedule D and looking at each and every one, then selectively deleting the bad ones.

- By the way, a quicken to turbotax import still fills out your schedule D incorrectly. It does not show the fund name and number of shares transacted, but simply shows the fund name. The import from vanguard does work correctly.

- Using the vanguard turbotax-on-the-web freebie to transfer the results produced no better or worse experience than using standalone turbotax. So if you're a voyager or flagship account holder, using the free online tool appears to cause no harm or provide no benefit vs paying for the product. I still havent used the freebie service available this year on the IRS web site that supposedly allows you to use this tax s/w free of charge if you e-file. I think you still have to pay for the state tax s/w. Since I got turbotax for federal and state along with quicken for free after rebates, I didnt bother with that.

Beer tastes good!
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Re: I need a beer.  Beer, beer, beer...here beery
Old 02-23-2005, 02:51 AM   #2
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Re: I need a beer.  Beer, beer, beer...here beery

Most of my investments are with Vanguard. I used their free Turbo tax and the import feature last year without any clitches.
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Re: I need a beer. *Beer, beer, beer...here beery
Old 02-23-2005, 03:21 AM   #3
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Re: I need a beer. *Beer, beer, beer...here beery

I just opened a Vanguard Roth IRA yesterday and wired the 2004 & 2005 amounts from my CU. I should have read the instructions that said that funds cannot be wired directly into any of there IRA accounts. I got a call last night to inform me of this fact and said that they would open a regular mutual fund account and that I could transfer the money from there to the Roth IRA. It didn't sound right to me but I did it anyways.

Please tell me I didn't screw up!!! How can I make the transfer on-line from this non-IRA account to the Roth account? I started by opening a Wellesley Roth IRA that I couldn't wire funds. Now they are sitting in a non-IRA Wellesley account.

Help!!!
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Re: I need a beer. *Beer, beer, beer...here beery
Old 02-23-2005, 04:41 AM   #4
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Re: I need a beer. *Beer, beer, beer...here beery

TH,

Please explain the "small losses" generated by sales from your Vanguard short term bond fund.

Are you referring to principal erosion due to rising interest rates?
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Re: I need a beer. *Beer, beer, beer...here beery
Old 02-23-2005, 09:38 AM   #5
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Re: I need a beer. *Beer, beer, beer...here beery

TH,
In situations like that, I simply ignored the wash sale rules and took the losses since they were very small. If the IRS happens to audit the return (doing this would not throw up a red flag as only sales are reported), let them figure it it; although, I don't think they would bother.

I hope you enjoyed the brewskies

Beachbumz
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Re: I need a beer.  Beer, beer, beer...here beery
Old 02-23-2005, 10:16 AM   #6
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Re: I need a beer.  Beer, beer, beer...here beery

The NAV on the short term bond fund varies from day to day, as do almost all mutual funds.

In these cases, I'd get, say a $10k dividend paid out from one fund into the short term bond fund and I'd then I'd sell those shares a couple of days later but the nav would make the sale $9,972. Which the IRS considers a short term loss. Given that a loss was generated, the wash sale rule is in effect and any purchases of that fund made 30 days prior or 30 days after the $9972 sale would make the sale subject to wash sale rules, which means you cant directly take the loss. Since the bond fund pays a dividend monthly and I was reinvesting those, there was always a purchase within the window. So any sale that generates a loss was subject to the wash sale rule.

As far as the transfer, with either turbotax for the web or deluxe standalone, the cost basis for all my mutual fund sales, and all of the wash sales were not automatically calculated, although the data was available online and I presume therefore available for download.

Beachbumz...on one hand, turbotax didnt give me the option to give up on pursuing the wash sale...on the other hand the govt aint getting a slug from me if they aint owed it. It took me over an hour to wrangle with it, but I kept an extra $21. Not a bad hourly wage.
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