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My accountant said he did not think the plan outlined in the article would work with an uneven IRA distribution, e.g. convert to a Roth in January and pay the taxes the following December directly to the feds from a Traditional IRA. In any case, I had decided against doing this.

I sold yesterday and this morning to cover the taxes. Even though I have high confidence in Musk & Tesla and I’ll continue to hold, I don’t want a large tax liability hanging over my head in such a hairy macro environment—pandemic creating trouble again in China, war in Europe, energy supplies in flux, inflation, rising rates, etc.

I came out ahead maybe $75 a share on average in between the conversions and the sales—I’m calling that a win and will move on.
Yeah, we have a portion in cash anyway, so holding off doesn't really make a difference. I orignally researched the topic to avoid the extra time step of disburse -> checkibg -> estimated submittal and whether it mattered for income type: Roth conversion vs RMD draw vs self employment taxes.

Does seem like a valid system though. I think the key is to be in the safe harbor zone by Dec 31st.

Reducing Estimated Tax Penalties With IRA Distributions
 
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Apologies for the newbish question. I have used Turbotax for years and it has worked well for my returns. However, In 2021 I really upped my trading volume of TSLA options, enough to result in a 50+ page consolidated 1099 form from my broker. I imported this into Turbo tax and it figured out my net gains quick and easy.

I'm wondering, is there something different an accountant or CPA could do with these same trades to reduce my tax liability? From what I spot checked on the 1099, it seems everything is correctly categorized and reported, but I have also heard people talk about painstaking processes of reconciling every trade manually and giving to an accountant. Obviously if a CPA could reduce my tax burden it would be worth the expense, but I'm wondering if/how they would get a different result than just using Turbotax?
 
Apologies for the newbish question. I have used Turbotax for years and it has worked well for my returns. However, In 2021 I really upped my trading volume of TSLA options, enough to result in a 50+ page consolidated 1099 form from my broker. I imported this into Turbo tax and it figured out my net gains quick and easy.

I'm wondering, is there something different an accountant or CPA could do with these same trades to reduce my tax liability? From what I spot checked on the 1099, it seems everything is correctly categorized and reported, but I have also heard people talk about painstaking processes of reconciling every trade manually and giving to an accountant. Obviously if a CPA could reduce my tax burden it would be worth the expense, but I'm wondering if/how they would get a different result than just using Turbotax?

IMO, CPA's help to reduce the risk of any person getting audited. They're there to make sure they protect your patootie.

Important when you're dealing with more complex scenarios.
 
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Apologies for the newbish question. I have used Turbotax for years and it has worked well for my returns. However, In 2021 I really upped my trading volume of TSLA options, enough to result in a 50+ page consolidated 1099 form from my broker. I imported this into Turbo tax and it figured out my net gains quick and easy.

I'm wondering, is there something different an accountant or CPA could do with these same trades to reduce my tax liability? From what I spot checked on the 1099, it seems everything is correctly categorized and reported, but I have also heard people talk about painstaking processes of reconciling every trade manually and giving to an accountant. Obviously if a CPA could reduce my tax burden it would be worth the expense, but I'm wondering if/how they would get a different result than just using Turbotax?
In the before times (pre 2011), people individually paired their buy and sell lots along with cost basis. Then, the legislation changed it so the broker does this. You only have until the settlement date to select FIFO LIFO or other if you want something other than the default which starts at FIFO (don't ask me how I found this out...).
So the 1099-B from the brokerage already did it.
 
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In the before times (pre 2011), people individually paired their buy and sell lots along with cost basis. Then, the legislation changed it so the broker does this. You only have until the settlement date to select FIFO LIFO or other if you want something other than the default which starts at FIFO (don't ask me how I found this out...).
So the 1099-B from the brokerage already did it.


I mean, the only reason we have to file taxes at all in the US is the lobbying $ spent by folks like Inuit and HR Block to keep their industry in business.

The IRS is already sent all the info they need (with rare exceptions)-- in other countries they do return-free filing where they just send you a "this is what we think your taxes are, did we miss anything?" notice instead of each individual having to file a bunch of pointless paperwork with info they already have.

See also:
 
In the before times (pre 2011), people individually paired their buy and sell lots along with cost basis. Then, the legislation changed it so the broker does this. You only have until the settlement date to select FIFO LIFO or other if you want something other than the default which starts at FIFO (don't ask me how I found this out...).
So the 1099-B from the brokerage already did it.
I would say one can set the DEFAULT for FIFO, LIFO but in any trade one can always pick the lots to execute on instead.. takes a TAD more effort but with the 4 brokers I use I can pick and choose even though there is a FIFO selection as “default”

To the OP, a CPA isn’t really going to interpret the tax code differently than TT will. If there was no basis listed at all for some very very old positions then yes, you or a CPA will have to put in that information, which TT isn’t going to just default to. I’d say, when you say CPA, I’m not sure if you mean tax accountant but they are going to just pull in the SAME information from the custodian, with your CUSIP ID and the information is the same. they might add to it (basis alternations as described) but they can’t change Either the FIFO or LIFO education details after the fact.
 
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I mean, the only reason we have to file taxes at all in the US is the lobbying $ spent by folks like Inuit and HR Block to keep their industry in business.

The IRS is already sent all the info they need (with rare exceptions)-- in other countries they do return-free filing where they just send you a "this is what we think your taxes are, did we miss anything?" notice instead of each individual having to file a bunch of pointless paperwork with info they already have.

See also:
The IRS is indeed not sent all the “information they need” at all, for most taxpayers. They don’t get the detail of mortgage payments, they don’t have any detail of state and local tax payments. they don’t get any detail of deductions, medical expenses, other applicable deductions that the taxpayer might take. In the case of course for either IC or 1099, they don’t get any information about legitimate business expenses, costs for healthcare premiums, contributions to qualified retirement accounts, and or state and local taxes at all. So, while for many taxpayers who have NONE of these things, they might be able to process overall taxes owed I would say for at least 30-50% of taxpayers they don’t have what is required to be truly accurate or of benefit to the taxpayer

I’d also add that there really is very limited “paperwork” that a taxpayer is required to submit with the tax filing. Certainly their are forms that include the information, but no receipts are required for much of what I detail above. It’s only in the EVENT of a question (mostly about underreported INCOME) or truly disproportionate claimed deductions) that the IRS COULD request some backup documentation for either deductions or why their detail of income is not accurate.
 
I would say one can set the DEFAULT for FIFO, LIFO but in any trade one can always pick the lots to execute on instead.. takes a TAD more effort but with the 4 brokers I use I can pick and choose even though there is a FIFO selection as “default”
Yah we're saying the same thing. One can change it from the default on a per trade basis, and that default is FIFO, but can also be changed.
 
The IRS is indeed not sent all the “information they need” at all, for most taxpayers.

I don't believe this is accurate. For something like 9 out of 10 taxpayers- they absolutely do. For the remaining, it'd still be less work for everyone to just address the exceptions.


They don’t get the detail of mortgage payments

the "payment" isn't relevant to your taxes. Only thing like interest, MI premiums, and points are.

And of course those are reported to the IRS.

It's called a 1098. Everyone who pays $600 or more in interest, mortgage insurance premiums, or points during the tax year has their mortgage issuer file one.


they don’t have any detail of state and local tax payments.

A deduction almost nobody takes anymore. But if you're in the tiny group that does, would be an example of the folks who would need to reply to the IRSes "we think you owe this much" notice with a correction.

Which would still be massively less paperwork even for them (and especially for the nearly 90 percent of taxpayers who do not itemize)


they don’t get any detail of deductions, medical expenses, other applicable deductions that the taxpayer might take.

Again, like 90% of taxpayers don't file itemized and don't deduct this stuff.

If you do, you'd still do far less paperwork responding to a return-free-filing notice of taxes owed with ONLY the items the IRS didn't know about than the current system.


So, while for many taxpayers who have NONE of these things, they might be able to process overall taxes owed I would say for at least 30-50% of taxpayers they don’t have what is required to be truly accurate or of benefit to the taxpayer

Not remotely accurate.

Only about 11% of taxpayers itemized in 2021.

Everyone else just took the standard deduction.

And it's been that way for a number of years now since the ~2017 reforms.


So none of your exceptions would apply to, as I said, nearly 90% of filers.

They'd all suddenly not need to do any of the nonsense busy-work that keeps Intuit and the like in business.

And even for the remaining 11%, they'd still do less paperwork having to only file the exceptional items instead of re-sending all the stuff the IRS already has


It's better for everyone even if it's "only" the "most" better for 9/10 people.

It's how it's done for most taxpayers in most other western countries (with some local variation between those countries) where the legislature isn't paid off by tax-prep companies to keep it overly burdensome and complex.
 
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I don't believe this is accurate. For something like 9 out of 10 taxpayers- they absolutely do. For the remaining, it'd still be less work for everyone to just address the exceptions.




the "payment" isn't relevant to your taxes. Only thing like interest, MI premiums, and points are.

And of course those are reported to the IRS.

It's called a 1098. Everyone who pays $600 or more in interest, mortgage insurance premiums, or points during the tax year has their mortgage issuer file one.




A deduction almost nobody takes anymore. But if you're in the tiny group that does, would be an example of the folks who would need to reply to the IRSes "we think you owe this much" notice with a correction.

Which would still be massively less paperwork even for them (and especially for the nearly 90 percent of taxpayers who do not itemize)




Again, like 90% of taxpayers don't file itemized and don't deduct this stuff.

If you do, you'd still do far less paperwork responding to a return-free-filing notice of taxes owed with ONLY the items the IRS didn't know about than the current system.




Not remotely accurate.

Only about 11% of taxpayers itemized in 2021.

Everyone else just took the standard deduction.

And it's been that way for a number of years now since the ~2017 reforms.


So none of your exceptions would apply to, as I said, nearly 90% of filers.

They'd all suddenly not need to do any of the nonsense busy-work that keeps Intuit and the like in business.

And even for the remaining 11%, they'd still do less paperwork having to only file the exceptional items instead of re-sending all the stuff the IRS already has


It's better for everyone even if it's "only" the "most" better for 9/10 people.

It's how it's done for most taxpayers in most other western countries (with some local variation between those countries) where the legislature isn't paid off by tax-prep companies to keep it overly burdensome and complex.
It really does depend on the quintile,, and I’m going to assume most people here are not in the bottom 5 quintile. Prior to 2019 tax law changes (which is when many of these took effect) 45-90% of the top FIVE quintile took more than the standard deduction. that has come down a bit for the middle 5 and 6 quintile, but for the 7-10 quintile they are still filing for more than standard deduction more than 40% of the time up to nearly 85% of the time. Yes, the bottom 4-5 quintile are a LOT of taxpayers, many if not most of which wouldn’t take anything more than the standard deduction.
 
It really does depend on the quintile,, and I’m going to assume most people here are not in the bottom 5 quintile. Prior to 2019 tax law changes (which is when many of these took effect) 45-90% of the top FIVE quintile took more than the standard deduction.


So when I mentioned the IRS has the info it needs for most people. Because it does.

And you tried to insist that was wrong... you really meant "Well, it's not necessarily true for rich folk!" and felt that was reason to argue about it?


Weird take.


Especially when what I suggest is still better for even the richest people since it would reduce them needing to file for the parts the IRS does have on them. Which is still quite a bit.



So it'd eliminate like 90% of the paperwork and time wasted for 90% of all taxpayers. It'd reduce a ton of processing work for the IRS. It'd reduce mistakes in filing.

And it'd still eliminate some of the time and paperwork and mistakes for us rich people too.


It's better for everyone unless you work for Intuit and the like.
 
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Got a question about wash sale rule.
Say, for example, you sold stock got called twice last month, about 10 days apart. The funds you were counting on to cover finally arrived, and you now want to buy back in. You're 31 days (to be safe) past the first sale date but have a while longer to go before you are past the second sale date.
If you buy today, is the share amount sold in the second case the only wash sale assignation? Meaning, the shares from the earlier sale are out from under the rule? The second sale is a trivial number of shares, and I would not mind the wash assignment for them.
 
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Got a question about wash sale rule.
Say, for example, you sold stock got called twice last month, about 10 days apart. The funds you were counting on to cover finally arrived, and you now want to buy back in. You're 31 days (to be safe) past the first sale date but have a while longer to go before you are past the second sale date.
If you buy today, is the share amount sold in the second case the only wash sale assignation? Meaning, the shares from the earlier sale are out from under the rule? The second sale is a trivial number of shares, and I would not mind the wash assignment for them.
I think your logic is correct, the small amount of the 2nd wash sale will be assigned to this buy. The rest will be considered a regular loss.
 
I'm in a somewhat unique situation, but I'm sure others have or will face it. This year I'm going to have a huge amount of medical expenses to write off and I was planning on selling some TSLA stock (long-term capital gain) to take advantage of that. This plan came before the stock went into the toilet however. Also, the Washington State legislature has now imposed a 7% capital gains tax upon us! And they're calling it an excise tax rather than an income tax, because imposing an income tax would require a vote by the people, which would probably get voted down (I would hope... there are a lot of Microsoft millionaires in this state). While I pretty sure it will be found to be unconstitutional, the courts have authorised the state to collect it in the interim (how?).

So while I was hoping TSLA would have at least started the pop by now, per @StarFoxisDown! it doesn't look like it will until January if then. So I'm in a quandary: sell Tesla stock at this low price to take advantage of the medical expenses or keep it until it pops and pay long-term capital gains taxes. I don't really need the money yet, but I hate to let that big write-off go to waste.

Any advice from all you learned folk will be appreciated!
 
I'm in a somewhat unique situation, but I'm sure others have or will face it. This year I'm going to have a huge amount of medical expenses to write off and I was planning on selling some TSLA stock (long-term capital gain) to take advantage of that. This plan came before the stock went into the toilet however. Also, the Washington State legislature has now imposed a 7% capital gains tax upon us! And they're calling it an excise tax rather than an income tax, because imposing an income tax would require a vote by the people, which would probably get voted down (I would hope... there are a lot of Microsoft millionaires in this state). While I pretty sure it will be found to be unconstitutional, the courts have authorised the state to collect it in the interim (how?).

So while I was hoping TSLA would have at least started the pop by now, per @StarFoxisDown! it doesn't look like it will until January if then. So I'm in a quandary: sell Tesla stock at this low price to take advantage of the medical expenses or keep it until it pops and pay long-term capital gains taxes. I don't really need the money yet, but I hate to let that big write-off go to waste.

Any advice from all you learned folk will be appreciated!
I can't remember where I heard this, but "Don't let the tax tail wag the investment dog."

Do you expect TSLA to go up more than 7% next year?