MAGI & TAX Projection is a Crap Shoot at best

[rkser]

I am treading quick sand when I try to project my 2022 MAGI for 2024 IRMAA & my Income Tax Totals for the year -

I have -
1) VTI
2) VXUS
3) VBIRX

The difficulties I face are -

I moved part of our Taxable accounts to Fidelity, although keeping the same Vanguard ETFs/MF. That is causing part of the problems & a part of my confusion .

What date are the final "Dividends - Qualified & Ordinary + Cap Gains" posted on Vanguard & Fidelity websites ? OR the % of Qualified dividends of the Ordinary Dividends of my ETFs, so I can get the taxes & the totals correctly.

I believe VXUS the Vanguard International Stock Index has its Foreign Tax Credit coming in 2023, of around 7%. but is it 7% of year's dividends from that fund ? OR I am not sure 7% of what ?

VTI - Is the last date of its Dividends i.e Qualified + Ordinary Dividends coming the 28th Dec ? I can wait, so I do not have to calculate the projections or the proportion of Qualified dividends of Ordinary Dividends ?

VBIRX - Date the Qualified + Ordinary Dividends coming on the websites ? or the proportion of Qualified dividends of Ordinary Dividends ?

I have taken the projected 2024 IRMAA cut offs from Harry Sit's article, he is usually quite close to the actual figures.

I use the 1040 calculator from AARP, but the same calculator is given on other sites as well... dinky town, mortgage calculators etc...

I have done Roth conversions, so that is causing some anxiety if I have crossed the higher IRMAA thresholds ?

I do have VWIUX, the TAX EXEMPT Intermediate Bond , the dividends of which I will add my AGI to, to get our MAGI for IRMAA calculations

Please help if you can, I thank you in advance

 

[audreyh1]

I use the same IRMAA projections. https://thefinancebuff.com/medicare-irmaa-income-brackets.html

How much foreign tax credit did you get last year? I doubt it’s much larger this year per share and might be less.

VBIRX - bond funds really don’t pay qualified dividends. Also for the amount if Vanguard does not provide an estimate, you can use the Nov dividend as a good guess.

Note that IRMAA is not affected at all by whether dividends are qualified. AGI plus tax exempt interest is what determines MAGI.

Figuring out AGI/MAGI is simpler then figuring out the taxes owed. Maybe focus on that initially.

Since you own Vanguard funds the distribution dates are the same regardless of where you hold them, so doesn’t matter if at Fidelity or Vanguard.

 

[RunningBum]

VTI dividend / share can be found at https://stockanalysis.com/etf/vti/dividend/. I used that same site to find the VOO dividend, and it was correct, so I'm assuming it will be right for VTI.

I found the % qualified divs on Vanguard but can't remember where. Search for it, the info is there. I believe it is 95% this year. That's what I used. Also, some or all of that remaining 5% will be reduced by a 20% QBI, but that deduction is taken after AGI/MAGI. I'm pretty sure there will be some QBI reduction, but not sure if it is on all of the remaining 5% or just part of it. This was on line 13 of last year's 1040.

And yes, you should see the dividend in your account on the 28th.

VXUS: I used to own the mutual fund equivalent, VTIAX. What I found is that the dividend distribution you get is AFTER the foreign taxes are paid. And even though it seems to me they ought to be able to tell you how much those taxes are, you won't find out until you get your 1099 after the end of the year. It was pretty consistently around 7% that you had to add onto your received dividend distribution to find the actual amount of the dividend that makes up your MAGI. In years where I had the ACA subsidy cliff to worry about, I used an 8% add on for buffer. Note that I said "used to own" so I don't know if this has changed since I sold it.

I don't own VBIRX. The dates of the dividend should be on VG. Not sure where to find the amount of the dividend.

 

[rkser]

Thankyou so much Audrey & Runner,

Regarding VXUS International Stock ETF - What percentage of its Ordinary Dividend can be estimated to be Qualified Dividend Income QDI ?
I know it is much less than that of VTI, I am unable to find it .

Thankyou again

 

[audreyh1]

I have only been able to use past year history looking at ratios to estimate %qualified dividends per fund. I don’t have any Vanguard funds, so I don’t know what info they provide ahead of time.

 

[walkinwood]

You will find the percentage of the total dividend that is qualified in the "Final Estimated Year-end distributions" on the vanguard site under the column "Estimated QDI"

https://www.vanguard.com/pdf/PIFYEEST_122022.pdf


But like AudreyH say, it doesn't matter for calculating the modified AGI. The foreign taxes paid do matter. I've used a 10% of dividend estimate, but I should go back and see if the foreign tax paid as a percentage of dividends remains relatively constant for my funds.

 

[audreyh1]

I just used last year’s number for foreign tax credit. The dividends came in lighter this year so I think that is reasonably conservative. Of course you have to adjust it if you bought more shares.

 

[pb4uski]

Back when I had foreign equities, estimating foreign tax credit was the most difficult thing, it was always a crapshoot but didn't vary much from year to year as I recall.

 

[Midpack]

I have only been able to use past year history looking at ratios to estimate %qualified dividends per fund. I don’t have any Vanguard funds, so I don’t know what info they provide ahead of time.

That’s what I do, and it’s worked pretty well in all past years.

 

[Sue J]

VTI dividend / share can be found at https://stockanalysis.com/etf/vti/dividend/. I used that same site to find the VOO dividend, and it was correct, so I'm assuming it will be right for VTI.

I found the % qualified divs on Vanguard but can't remember where. Search for it, the info is there. I believe it is 95% this year. That's what I used. Also, some or all of that remaining 5% will be reduced by a 20% QBI, but that deduction is taken after AGI/MAGI. I'm pretty sure there will be some QBI reduction, but not sure if it is on all of the remaining 5% or just part of it. This was on line 13 of last year's 1040.

Is this it? This is for 2021. Maybe there is also one for 2022, or is that only after Jan 1?

https://investor.vanguard.com/inves...es/qdi-yearend-qualified-dividend-income-2021

 

[RunningBum]

Is this it? This is for 2021. Maybe there is also one for 2022, or is that only after Jan 1?

https://investor.vanguard.com/inves...es/qdi-yearend-qualified-dividend-income-2021

Sorry, I can't find it again. The Vanguard site is very frustrating to try to find info like this. I'm not sure others are any better.