New Vanguard Tax Statement On Sells

[Still Learning]

Looks like a new tax statement that requires completion before proceeding with a sale. In our case we do not require tax to be withheld because tax withholding on other income is still adequate. It's only a small test $5K dated retirement fund. Not finding a way around this yet to proceed with a cell. Awaiting a response from our accountant.

Thought I would toss it out there.

Choose a cost basis method for VTTHX​

Cost basis is generally the price you paid for your shares of a security. The cost basis method you choose will help determine your gain or loss on the sale along with its tax implications.
Your selection will be established as your preferred cost basis method for this holding for all future sales.
Learn more about cost basis opens in a new tab

Minimum tax (MinTax)
Automatically chooses shares with the goal of minimizing tax impact of each transaction.
Learn how MinTax can potentially reduce your capital gains taxes opens in a new tab

Highest in, first out (HIFO)
Shares with the highest price are sold first regardless of how long you've held the security.

First in, first out (FIFO)
Shares with the oldest acquisition date are sold first.

Average cost (AvgCost)
Calculates cost basis using an average cost for each share you own so that all shares of a security have the same basis.
If you'd like to use Specific Identification (SpecID) as your cost basis method for this transaction, please use our full experience.

 

[SecondCor521]

Maybe, maybe not.

I can't tell how you got to that screen, but you may have clicked on it by accident.

For a long while, and I suspect still now, Vanguard has a default cost basis method which you could change to one of the other methods if you wanted to.

The screen you're looking at seems to be one where you choose the cost basis method. If you got there by accident, as I suspect, there is a way to execute your sale without choosing a cost basis method and Vanguard will just use the default.

If it is new and required, then just choose the cost basis method and execute your sale. I would expect Vanguard to remember your selection and apply it to any future sales of that investment in that account.

Of course, cost basis method can affect your taxes and you should know what you're doing.

Oh, and cost basis method really doesn't have anything to do with tax withholding. They're two different topics, only minimally and tangentially related.

Personally I use specific ID for all of my Vanguard investments because I like the control over my taxes, but the other choices listed are reasonable in their own ways.

 

[Still Learning]

Thanks for your response. Just spoke with a Vanguard Rep. Since this is in my taxable Non-Retirement Brokerage account that I opened two years ago it is evidently a new requirement before I can proceed with a sell. In the process of getting advice from our accountant before I make a selection. Since already retired, this account will continue to grow in size. Never came up when we selected our monthly withdraw rate. Looks to be my first sell from this non-retirement account.

 

[SecondCor521]

Interesting. I had already chosen my cost basis method before this new Vanguard requirement so I am not affected similarly.

As mentioned, Vanguard used to have a default cost basis method (FIFO I think), and that's what they would use unless you changed it. Maybe people complained and Vanguard thinks this new way is better.

 

[RetMD21]

I think it's worth thinking about which method to use. FIFO seemed like an odd default. Although I often use specific share ID for stocks, TaxMin or HIFO work well if you want to minimize taxes.