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Estimating 1099-DIV income?
Old 11-16-2013, 02:04 PM   #1
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Estimating 1099-DIV income?

So with all this talk lately about managing income (to maximize capital gains harvesting, maximize ACA subsidies, etc.), I find myself drawing a complete blank at trying to semi-accurately estimate my 1099-DIV income.

In previous years, my year-to-year variance in 1099-DIV income was about 20% or so. This was good enough for general tax planning, but I'm seeing the need to get more accurate going forward, but can't think of any way to do so. I'm guessing I can factor in general stock market performance (and assume dividends will loosely correlate with stock performance), but it seems that it would be only a little more accurate than random guessing.

So, long winded way of getting to the question: Does anyone have any method for somewhat accurately estimating 1099-DIV income?
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Old 11-16-2013, 02:10 PM   #2
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It won't be too long before Vanguard and other firms start giving estimates, and the actual distributions come out a couple weeks before year's end. This is when I go my final Roth conversion (or not) and anything else I may have been able to control.

If you want a good estimate at the start of the year, I don't have one other than what you've done, predicting based on previous years.
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Old 11-16-2013, 02:34 PM   #3
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Very easy to do a pretty good job for current year taxes which will be filed next year. I keep a spreadsheet with each stock, each dividend, classification of dividend etc. You can see about how rapidly each stock's income is growing to make rough future guesses, but I mainly use it for current year, as likely I will have some turnover before the next year anyway.

I pay close attention to this, unlike more macro-portfolio issues.

Ha
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Old 11-16-2013, 02:43 PM   #4
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Originally Posted by skyline View Post
So with all this talk lately about managing income (to maximize capital gains harvesting, maximize ACA subsidies, etc.), I find myself drawing a complete blank at trying to semi-accurately estimate my 1099-DIV income.

In previous years, my year-to-year variance in 1099-DIV income was about 20% or so. This was good enough for general tax planning, but I'm seeing the need to get more accurate going forward, but can't think of any way to do so. I'm guessing I can factor in general stock market performance (and assume dividends will loosely correlate with stock performance), but it seems that it would be only a little more accurate than random guessing.

So, long winded way of getting to the question: Does anyone have any method for somewhat accurately estimating 1099-DIV income?
2 ways:

1. Excel portfolio - I keep my massive list of all holdings in an Excel portfolio to track each week's values. In several of my columns I have info related to distributions. Every 4 months, I update the annual dividend rate based on my Yahoo! portfolio custom portfolio dividend amount (Yahoo!'s info isn't always updated to the minute, but it's close enough for my needs...but note that Yahoo!'s info for ETFs is much more prone to not being correct!). By looking at your projected annual cash flow from each security with a simple "SUM()" function in excel, you can instantly see what to expect each year from dividends.

2. Monthly statement - Each broker should show your YTD total dividends received on your monthly statements. There will be adjustments at the end of the year, based on adjustments from each individual holding for return-of-capital, etc....but it should be somewhat in the ballpark.
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Old 11-16-2013, 03:25 PM   #5
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Originally Posted by RunningBum View Post
It won't be too long before Vanguard and other firms start giving estimates, and the actual distributions come out a couple weeks before year's end. This is when I go my final Roth conversion (or not) and anything else I may have been able to control.
+1. I take the Vanguard data that is available in December and put it into Turbo Tax to see what my tax hit will be. I then enter it into Turbo Tax and see the tax implication of any Roth conversion I might do before year end also figuring in the potential ACA subsidy. Some of their funds (like REIT) don't give you a final number until after the first of the year, which is one reason I sold it.
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Old 11-16-2013, 03:30 PM   #6
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Actually, most firms including Vanguard have already given estimates for their 2013 year end distributions.

I estimate for tax planning purposes. It's tedious, but I calculate the expected distributions for each fund I own in a taxable account using a spreadsheet.
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Old 11-16-2013, 04:22 PM   #7
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Because all of my income is investment income, I am always trying to figure out in advance what it will be so I can estimate my income tax bill. The monthly bond fund dividends are not very difficult because they don't vary a whole lot and there are 12 of them so if I overshoot on 1 or 2 of them I am likely to undershoot on another 1 or 2 of them. It is the more erratic distributions which are tougher to estimate.

Fidelity recently published its year-end distributions for many of its funds so I can better estimate what I will owe in taxes. Those estimates often change before the distibution occures and not all funds have any estimates out yet, so this system is not foolproof.

My friend who received a large inheritance last year has a lot of individual securities and mutual funds. Using a spreadsheet, I keep track of the many distributions and dividends he receives so we can make sure he is in a "safe harbor" to avoid any penalties for underpayment or underwithholding of income taxes. Thankfully, many of his distributions are pretty consistent from month to month or quarter to quarter so it is not that tough to figure out. Still, it is a bit of a chore sometimes.
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Old 11-16-2013, 06:09 PM   #8
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Very easy to do a pretty good job for current year taxes which will be filed next year. I keep a spreadsheet with each stock, each dividend, classification of dividend etc. You can see about how rapidly each stock's income is growing to make rough future guesses, but I mainly use it for current year, as likely I will have some turnover before the next year anyway.

I pay close attention to this, unlike more macro-portfolio issues.

Ha
I do the same, and I am not anal about many things but I do keep good records on dividends and interest.

. I just went through the how much will earn in 2013 exercise last night.

Step 1 look at last years tax return and use that to make sure I wasn't forgetting anything.
Step 2 look at brokerage statement for Sept. My quarterly distributions are pretty consistent so I can just multiple the YTD dividends on my Sept statement by 1.33.
Step 3 add in the end of year distributions. While plenty of EFT/mutual funds distribution dividends,like VTI, or SPY on quarterly basis plenty only do so at the end of the year. It has been an incredible year for dividend increases so expect dividends your fund distributes to increase by about 15% over 2012.
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Old 11-16-2013, 08:07 PM   #9
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I've got the spreadsheet, with columns for total number of shares for each fund and manual entries for year end distribution estimates from each fund company as they become available. Quicken has all the info on distributions to date. Qualified versus unqualified dividends is a guess, using the ratio from last year.

However, this year I have a bunch of Roth conversions, some of which will be recharacterized. so I'll be able to adjust my taxes at tax time.
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Old 11-17-2013, 04:55 AM   #10
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I did my first run-through with Turbotax 2013 yesterday (it was released on Friday), and faced this. What I did is just use "past 12 months" data from Quicken, and bumped it up about 5% but that's probably not going to be accurate. 15% eh? Hmmm... guess I have more work to do.
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Old 11-17-2013, 05:32 AM   #11
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Originally Posted by audreyh1 View Post
Actually, most firms including Vanguard have already given estimates for their 2013 year end distributions.
I see the estimate for Capital Gain distributions, but not for dividends.

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It has been an incredible year for dividend increases so expect dividends your fund distributes to increase by about 15% over 2012.
The first mutual fund I checked VGHAX doesn't have dividend info out yet, but it does have preliminary capital gain distribution info out. It was $0.90/share last year - this year is $4.31/share. (!)
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Old 11-17-2013, 09:02 AM   #12
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I see the estimate for Capital Gain distributions, but not for dividends.
Yes, for my funds I assume the dividends will be the same quarterly/monthly as the rest of the year if they only spell out capital gains. Each company provides their estimate a little differently.
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Old 11-17-2013, 09:11 AM   #13
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Looking at transaction history of my Vanguard account it looks like they throw that last dividend distribution in there after Dec 20 including a few times as late as Dec 31st so if you have stuff to do by year end it seems possible to know the exact amount but you've really got to be on the ball.

Wearing a Happy New Year hat while filling out your roth conversion form online?
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Old 11-17-2013, 09:35 AM   #14
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Yes, for my funds I assume the dividends will be the same quarterly/monthly as the rest of the year if they only spell out capital gains. Each company provides their estimate a little differently.
Seems reasonable. I'm finding that VGHAX is different from most Vanguard funds in several ways, including this one: It throws a small dividend distribution in March and then a big dividend distribution in December. I don't think tripling the March distribution necessarily will provide much insight into the December distribution. You had to multiply by 16 in 2011 and by 26 in 2012.

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Looking at transaction history of my Vanguard account it looks like they throw that last dividend distribution in there after Dec 20 including a few times as late as Dec 31st so if you have stuff to do by year end it seems possible to know the exact amount but you've really got to be on the ball.

Wearing a Happy New Year hat while filling out your roth conversion form online?
I'm pretty sure Vanguard does telegraph what the dividends will be, but just not yet. Last year it was December 3, updated on December 5.
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Old 11-17-2013, 11:16 AM   #15
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This is the Vanguard calendar showing when it will give estimates this year:

https://personal.vanguard.com/us/ins...chedule-102013
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Old 11-17-2013, 11:25 AM   #16
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Thanks to everyone for their responses - I'm almost completely invested in Vanguard funds so I'm not all that sure if it's possible to accurately track the dividends on mutual funds/ETFs manually, but I am very happy to hear that Vanguard publishes estimates prior to year-end! This is very helpful.
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Old 11-17-2013, 11:52 AM   #17
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Thanks to everyone for their responses - I'm almost completely invested in Vanguard funds so I'm not all that sure if it's possible to accurately track the dividends on mutual funds/ETFs manually, but I am very happy to hear that Vanguard publishes estimates prior to year-end! This is very helpful.
Most funds declare their distributions some time in early-mid December. I have found that I can prepare a pro-forma tax return with very accurate estimates in late December since almost all income is known by then. I mainly do this to get the state estimated tax reasonably accurate so that the deduction is in for the year.

For Federal estimates, I just figure out the safe harbor at the beginning of the year and set those up as automatic debits through the EFTPS system. As long as you meet the safe-harbor test there isn't a real need for accuracy on Federal estimates.

If you are considering ROTH conversion, that is a different matter. Accuracy matters. But again, if all your money is at VG, by mid-December the die is pretty much cast.

The "good news" if you want to call it that, is that there is zero chance that congress will do anything that will affect 2013 taxes (so tax software will be fairly good and early). In fact, we may never see them do anything again in our lifetime, on anything.
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