What/how is reported as income from my portfolio?

[doneat54]

Maybe I am overthinking this, but...

The vast majority of our portfolio is in Fidelity, scattered between DW and I's Rollover IRAs, Roths and a single WROS (brokerage) account that we share.


Last year stuffed the proceeds of our primary house sale into the WROS account. Most of it is invested in a CD but some is in a Money Market type FIDO holding (FZDXX). Am I wrong to think that I can pull some of that out of FIDO and put it in my home bank without it getting reported to the IRS as income and I, in fact, will not have to pay taxes on it? (We live in NH BTW, no income tax). The home sale did not exceed the $500k gain threshold.


And when the CD matures, and the "coupon" gets paid, will that be reported as income at that time, even if I leave it in the WROS account? I'd like it to, actually.

 

[Gumby]

I may be confused about what you are saying, but I have only ever seen WROS used to mean "joint ownership with right of survivorship" which goes to the legal ownership of the account, not the tax treatment. If it is a taxable account, then transferring money to another taxable account is not a taxable event. However, any interest or dividends paid in that account would be taxable - that would include distributions paid out by the money market fund, as well as the interest paid on the CD.

But, again, I'm not clear exactly what you mean by WROS account.

 

[Gotadimple]

A WROS account is a bank account for joint owners With Right of Survivorship. I'm not sure I understand what kind of account you have that would make any earnings not subject to income tax. The basic deposit are not subject to tax, but any earnings are.

Same for the CD. The coupon rate is subject to income tax. Just because the CD matures and the original deposit and coupon earnings are deposited into your account at a bank or at Fidelity, Fidelity will report the earnings on the CD to the IRS. Any you will owe taxes on the coupon amount.

 

[audreyh1]

Transfers between a taxable brokerage account and a bank account are not taxable events.

If you sell something to send cash to the bank that may be taxable. Selling money market shares is not taxable because there is no capital gain. Interest/dividends paid from your money market account is already reported as taxable income.

The coupon paid by the CD is also reported as taxable income whether it is transferred out or not.

 

[PaunchyPirate]

Maybe I am overthinking this, but...

The vast majority of our portfolio is in Fidelity, scattered between DW and I's Rollover IRAs, Roths and a single WROS (brokerage) account that we share.


Last year stuffed the proceeds of our primary house sale into the WROS account. Most of it is invested in a CD but some is in a Money Market type FIDO holding (FZDXX). Am I wrong to think that I can pull some of that out of FIDO and put it in my home bank without it getting reported to the IRS as income and I, in fact, will not have to pay taxes on it? (We live in NH BTW, no income tax). The home sale did not exceed the $500k gain threshold.


And when the CD matures, and the "coupon" gets paid, will that be reported as income at that time, even if I leave it in the WROS account? I'd like it to, actually.

The interest paid by the CD will be taxable and reported to the IRS.
The monthly dividends earned from FZDXX will be taxable and reported to the IRS.

If you decide to sell $100,000 of the FZDXX and transfer that to you local bank account, that is not taxable. You bought FZDXX at $1 per share and are selling it at $1 per share. There is no capital gain on the sale, thus no taxes due.

 

[doneat54]

Awesome, thanks. As I thought. FIDO just list the account as "Joint WROS". It is a taxable brokerage account. I do understand that any earnings, dividends and CD payouts would be taxable.