Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[Jenson71]

Originally Posted by petegz28

Follow me here....

Rolls over to Roth

Claims on tax returns

Tax return says you now owe $X

Pays tax bill for $X


Paying estimated taxes is just that, estimated. At the end of the day you have until April 15th of whatever year to true up what you owe or don't owe.

So why not leave the money he is going to pay the tax bill with in an account earning 4% for the year and then pay when he has too?

No one is going to come knocking on his door for any tax payment until April 16th, 2024.

Buehler's right -- if the tax return says you now owe $X, and you have not paid 90% (I think that's it, in general) of $X by end of that tax year, you owe an underpayment penalty. If we didn't have that rule, then most people wouldn't want to withhold anything from their paychecks and all our self-employed people would wait to the last second to pay their taxes, thus depriving the IRS of what's rightfully theirs for nearly a year. ( )

[petegz28]

Originally Posted by Jenson71

Buehler's right -- if the tax return says you now owe $X, and you have not paid 90% (I think that's it, in general) of $X by end of that tax year, you owe an underpayment penalty.

I am not sure I agree with that. My Wife does IRA administration, I will hit her up on that but as far as I know, you have 60 days to get the money rolled over and any tax you owe can get paid when you file your taxes. Just like any other time your tax return says you owe. Maybe it's this 90% thing you are talking about....

[Jenson71]

Originally Posted by petegz28

I am not sure I agree with that. My Wife does IRA administration, I will hit her up on that but as far as I know, you have 60 days to get the money rolled over and any tax you owe can get paid when you file your taxes. Just like any other time your tax return says you owe. Maybe it's this 90% thing you are talking about....

Yes, they are two separate concerns. One is, 'I don't legally need to withhold taxes from the converted IRA.' The second concern is, 'but maybe I want to do something to avoid the underpayment penalty focusing on ALL of my income at the end of my tax year, so let me throw in an estimated tax payment to be safe'

[ChiefsFan63]

Originally Posted by petegz28

I am not sure I agree with that. My Wife does IRA administration, I will hit her up on that but as far as I know, you have 60 days to get the money rolled over and any tax you owe can get paid when you file your taxes. Just like any other time your tax return says you owe. Maybe it's this 90% thing you are talking about....

One exemption to paying penalties is that if you have paid at least your tax liability from last year. If your total tax liability from last year was $5k, for instance, as long as you had paid $5k withholding this year there would be no penalty for under withholding. I use this exemption often if I have unexpected income or capital gains.

[Buehler445]

Originally Posted by petegz28

I am not sure I agree with that. My Wife does IRA administration, I will hit her up on that but as far as I know, you have 60 days to get the money rolled over and any tax you owe can get paid when you file your taxes. Just like any other time your tax return says you owe. Maybe it's this 90% thing you are talking about....

Dude.

It has nothing to do with the IRA. The IRA Conversion just creates income. Forget the IRA.

If you're single, but you mark down you're married and have 400 kids on your W-4 and you don't withhold enough, there will be an underpayment penalty.

I did a return that had a guy that got a bunch of ESPP stock that he sold, with the runup he had a pretty big gain. Him and his Wife both had W-2 earnings, with withholdings, but he was underwithheld because the stock sale had no withholdings. So he had an underpayment penalty.

But if you have a bunch of income that doesn't have withholding against it, you either need to make an estimate or pay an underpayment tax.

Seriously. Read the link I posted.

[lewdog]

Originally Posted by Buehler445

Dude.

It has nothing to do with the IRA. The IRA Conversion just creates income. Forget the IRA.

If you're single, but you mark down you're married and have 400 kids on your W-4 and you don't withhold enough, there will be an underpayment penalty.

I did a return that had a guy that got a bunch of ESPP stock that he sold, with the runup he had a pretty big gain. Him and his Wife both had W-2 earnings, with withholdings, but he was underwithheld because the stock sale had no withholdings. So he had an underpayment penalty.

But if you have a bunch of income that doesn't have withholding against it, you either need to make an estimate or pay an underpayment tax.

Seriously. Read the link I posted.

So if I do this conversion but increase my withholdings for the rest of the year, can I avoid paying estimated taxes that way?

[Rain Man]

Originally Posted by lewdog

So if I do this conversion but increase my withholdings for the rest of the year, can I avoid paying estimated taxes that way?

Yep.

[scho63]

Originally Posted by lewdog

I'm thinking of doing a ROTH conversion in my wife's IRA account. It's roughly $20k so I'd have to pay taxes on it. Still seems worth it right and would I have to pay estimated taxes on that or can I just roll it into next year's taxes?

I think they changed the rules back in 2017 going FROM a Roth IRA.

Better check with accountant.

[Buehler445]

Originally Posted by lewdog

So if I do this conversion but increase my withholdings for the rest of the year, can I avoid paying estimated taxes that way?

Should.

[threebag]

Best investment all year was selling 90 round bales at $100 a pop.

[lewdog]

Originally Posted by scho63

I think they changed the rules back in 2017 going FROM a Roth IRA.

Better check with accountant.

Buehler is my accountant, which is why I post all this stuff on CP.

[lewdog]

5 year lookback on the S&P 500 on a weekly chart. The drop from the highs of early 2022 don't look so bad if you have made sure to invest steadily over time. It's important to not lose sight. And every time you get a raise, make sure to increase your contribution rate. I am "younger" so my favorite index funds to invest in are VOO and VXF.

[Rain Man]

I'm officially annoyed. Some company came in and stole a good stock from me.

ATCO (don't bother looking it up because it's gone now) is a shipping company. It was a great stock. I was getting decent returns and a good dividend that added up to notable low-key success. It was one of my largest holdings and was definitely a keeper.

I was doing a checkup and realized that it was no longer in my portfolio. Some stupid company bought them out and the board of directors voted for it, and apparently that gave the new company the right to go into my personal account and sell the shares.

I understand the mechanics - as a shareholder I could have voted against the purchase with my 0.0000001 percent holdings of the company. The big fish voted for it and therefore my stock is gone. But man, something seems really wrong about a company that I've never heard of being able to order my personal account to sell the stock without my permission or knowledge. If you look at it logically, they said, "we think this stock is worth more than the market, so let's take it from all of the small shareholders so we can make the money on it instead of them".

It reeks of the big guys ripping off the retail investors.

[Hog's Gone Fishin]

Originally Posted by Rain Man

I'm officially annoyed. Some company came in and stole a good stock from me.

ATCO (don't bother looking it up because it's gone now) is a shipping company. It was a great stock. I was getting decent returns and a good dividend that added up to notable low-key success. It was one of my largest holdings and was definitely a keeper.

I was doing a checkup and realized that it was no longer in my portfolio. Some stupid company bought them out and the board of directors voted for it, and apparently that gave the new company the right to go into my personal account and sell the shares.

I understand the mechanics - as a shareholder I could have voted against the purchase with my 0.0000001 percent holdings of the company. The big fish voted for it and therefore my stock is gone. But man, something seems really wrong about a company that I've never heard of being able to order my personal account to sell the stock without my permission or knowledge. If you look at it logically, they said, "we think this stock is worth more than the market, so let's take it from all of the small shareholders so we can make the money on it instead of them".

It reeks of the big guys ripping off the retail investors.

Damn, I'm sorry that happened. I've learned so much over the last couple years about the system and it's definitely not a level playing field. It's a rigged system and the big boys do what they want.

Does the new company not have to give you some ownership though ??

I got caught in that with MMTLP, I knew it was going to be delisted but they cut off trading 48 hours early and the I now have new ownership of a company not publicly traded and have to look at a $3800 stock in my portfolio that is worthless.

[Rain Man]

Originally Posted by Hog's Gone Fishin

Damn, I'm sorry that happened. I've learned so much over the last couple years about the system and it's definitely not a level playing field. It's a rigged system and the big boys do what they want.

Does the new company not have to give you some ownership though ??

I got caught in that with MMTLP, I knew it was going to be delisted but they cut off trading 48 hours early and the I now have new ownership of a company not publicly traded and have to look at a $3800 stock in my portfolio that is worthless.

They often trade stock of the old company with stock in the new company, but I think this is the first time that they've just cashed me out.

Now that you mention it, I guess from that perspective I'd rather get the cash than get stock in some new company that I know nothing about. I just hate losing the old stock that has done well for me.

Sometimes companies will spin off a division into the new company, and by large I hate that. They assign some value to it and say, "Hey, you're getting $2,000 of stock in this new company!", and then more often than not it goes out onto the market and immediately declines to $600 or something. I swear that companies do that just to offload debt, and they dramatically overvalue the new company. It seems like a scam.

The only company that's done right by me on the spinoffs is GE. I have a little bit of GE and they've spun off WAB and GEHC, which have both done really well for me.

In an odd story, I used to have a company with the symbol ALC. They were bought by NVS, which I also happened to own in the same account. So ALC disappeared and I got some additional NVS stock. Several years later, NVS vomited it back up. They spun off ALC into a separate company so all of a sudden I had ALC stock again. I figure I got ripped off somehow, but it was so long between the buying and selling that I don't really know how I did on that loop.