IAU Taxes w/Fidelity and TurboTax

[era]

I have recently discovered the PP and am looking to transition to it. I have a couple questions regarding the gold allocation:

I think I am going to open up a taxable brokerage account with Fidelity and purchase the IAU ETF.

1) It looks like the fund expenses are gathered by selling off tiny portions of the fund. This I would assume would result in a taxable event. Does anyone here have experience with this? Specifically, does Fidelity provide this information, and can it be automatically imported into TurboTax?

2) The IAUF fund looks like a ticker that is meant to simplify this. It’s a derivative so I am unsure about it for the PP. The fund summary says its goal is to simplify the tax accounting by not requiring a K-1 form such as IAU does. Is this true? Does the IAU fund require a K-1 tax form?


Thank you for the help,
Eric

[Tyler]

I own IAU through Fidelity.

When you look at the annual summary, it indeed does report lots of small transactions. But Turbotax imports them all automatically so it's not a big deal.

I've never had to deal with a K-1 form, and according to this list physically backed funds like GLD and IAU don't have to issue them.

[era]

I own IAU through Fidelity.

When you look at the annual summary, it indeed does report lots of small transactions. But Turbotax imports them all automatically so it's not a big deal.

I've never had to deal with a K-1 form, and according to this list physically backed funds like GLD and IAU don't have to issue them.

Thanks for the reply. I also saw some info online that said IAU did not require a K-1, so I was slightly confused by the IAUF fund summary.

Have you gone through the process of selling IAU for a capital gain (or loss) through TurboTax? (I.e. does it “know” to apply the commodity tax?).

[Tyler]

I’ve definitely sold IAU, although I don’t remember specific times when I had a capital gain that wasn’t also offset by a capital loss elsewhere. But TurboTax is incredibly thorough, so my working assumption is that it’s all baked in.

[era]

I’ve definitely sold IAU, although I don’t remember specific times when I had a capital gain that wasn’t also offset by a capital loss elsewhere. But TurboTax is incredibly thorough, so my working assumption is that it’s all baked in.

This actually leads to one other question I have - I plan to hold VTSAX in a Vanguard brokerage. Do you happen to know if TurboTax will net out capital gains / losses across multiple brokerage accounts?

Thanks again.

[Tyler]

This actually leads to one other question I have - I plan to hold VTSAX in a Vanguard brokerage. Do you happen to know if TurboTax will net out capital gains / losses across multiple brokerage accounts?

I've never imported more than one brokerage account, but I do know that Turbotax allows that option. So I assume it would also calculate the taxes appropriately.

[ochotona]

OF COURSE I WOULD NEVER ADVOCATE TAX FRAUD, but if you replied on TurboTax to calculate the tax owned on a sale with a cap gain, and if it applied the regular cap gains tax, not the collectibles tax, well then I think you have a very interesting situation.

[yankees60]

OF COURSE I WOULD NEVER ADVOCATE TAX FRAUD, but if you replied on TurboTax to calculate the tax owned on a sale with a cap gain, and if it applied the regular cap gains tax, not the collectibles tax, well then I think you have a very interesting situation.

Sorry if I bring people on too many tangents. But, that said, does everyone here use TurboTax? Way back in the 90s I was using both their business and personal product and our business was spending $300 a year on those two products. But then, one of those years, Intuit got so money hungry that they severely restricted how much you could do on two computers with one copy of the personal product. It so enraged me that I dropped TurboTax entirely and have only used H&R Block since. I have, however, continued to use QuickBooks extensively and a lot of Quicken (although that has been sold by Intuit).

Finally, I run parallel Excel worksheets for all that is done in the tax software to make sure I understand and control every single result in the tax return. I go to the IRS web site to understand how every single issue is handled and document it in those worksheets with URLs and the exact words.

And, this year, I discovered someone who created the entire tax return based in Excel that was suitable for printing and filing (that is not at all the purpose of what I've created) which he makes available for free to all. I used that only to the extent of trying to divine how exactly the 20% business deduction was going to work. Since last year was its first year there was no clarity of how it was going to work prior to the actual 2018 tax forms coming out.

Vinny

[Xan]

I use and recommend Free File Fillable Forms. It's an electronic version of the paper forms. Does all the math for you. It's the official way to file online for free.

[InsuranceGuy]

[deleted]

[yankees60]

I have held IAU with FIdelity in the past and the small selloffs were in the annual summary and importable.

As far as free tax sites, https://www.freetaxusa.com/ is another good option. It even calculated what my state income tax should be so I can reverse engineer it on the state site.

Thank you for this resource! I have never been aware of any online state tax resource.

Vinny

[Tyler]

I download TurboTax for free every year through Fidelity. I think you have to have a minimum account balance to qualify, and even then they don't make the link easy to find. But it's worth looking for if you happen to invest with them.

[yankees60]

I use and recommend Free File Fillable Forms. It's an electronic version of the paper forms. Does all the math for you. It's the official way to file online for free.

I also use H&R Block's tax software. I can usually find the deluxe version for $15-20 on sale. It's worth that much to me to import last year's returns, especially bc I do about 5 returns each year including friends and family.

Turbotax is a fine product, but way more expensive and with too many restrictions. I would need the business version from them because of some rental income, and that retails for close to $100. I can do what I need to at the deluxe level with HRB.

I buy the H&R Block Deluxe + Efile + State. Depending upon when I buy it I think I pay in $30 to $40 range. If I buy it as soon as it is available (late November / December) I'm paying on the higher end. That is usually what I do to assist me in my tax planning for the year.

And, it seems like TurboTax does charge WAY more for the equivalent product.

I did use TurboTax this year for the first time in over 20 years when I was assisting someone who uses it. I thought it'd be a superior product to the H&R Block software but, maybe, because I was unfamiliar with it (while now quite familiar with H&R Block) I found it more difficult to determine how to enter things. It got quite frustrating at some points as I knew exactly where I wanted entries in the actual forms but it was not so easy to get them to appear there.

Vinny

[yankees60]

I download TurboTax for free every year through Fidelity. I think you have to have a minimum account balance to qualify, and even then they don't make the link easy to find. But it's worth looking for if you happen to invest with them.

1. That is the software download rather than the online version?
2. Does that include free e-file? If so, for how many returns?
Thanks

Does anyone here subscribe to what I once read that it makes it less likely of an audit if one files in paper because there is the added step of the IRS now having to hand key entry your information into their system?

Vinny

[Tyler]

1. That is the software download rather than the online version?
2. Does that include free e-file? If so, for how many returns?
Thanks

You can do either, but I always get the download. It also includes free e-file + one free state.

[InsuranceGuy]

[deleted]

[sophie]

Yes please!

I've gotten Turbotax through Fidelity, but only at a small discount, definitely not free. Will consider H&R block - thanks yankees60!

Oddly, New York State actually makes using the IRS online free forms impossible. There is a state online equivalent, but you can only use it if your income is below a certain (low) limit. Beyond that, they mandate that you efile through a commercial vendor. Geez! Did Turbotax bribe the governor or something?

Has anyone tried CreditKarma's free tax filing?

[mathjak107]

Yes please!

I've gotten Turbotax through Fidelity, but only at a small discount, definitely not free. Will consider H&R block - thanks yankees60!

Oddly, New York State actually makes using the IRS online free forms impossible. There is a state online equivalent, but you can only use it if your income is below a certain (low) limit. Beyond that, they mandate that you efile through a commercial vendor. Geez! Did Turbotax bribe the governor or something?

Has anyone tried CreditKarma's free tax filing?

We get it free from fidelity including the state as a perk for having fidelity private access status

[Tyler]

If anyone here sees a link to the deal, please post it. Thanks

FYI -- the free Turbotax Premier link finally showed up on my Fidelity summary page this week. You can use it to acquire either the online or download versions. Fidelity is notoriously vague about how they determine who qualifies so you may not see the same option I do, but if you have a Fidelity account it's worth checking.

[era]

I own IAU through Fidelity.

When you look at the annual summary, it indeed does report lots of small transactions. But Turbotax imports them all automatically so it's not a big deal.

I've never had to deal with a K-1 form, and according to this list physically backed funds like GLD and IAU don't have to issue them.

I had a quick follow up question regarding this - how are the small transactions reported? Are they little capital gains (i.e. on the 1099)? If so, if the price of gold goes up and down throughout the year, do some of the gains/losses cancel each other out?

Thanks you.

[Tyler]

I had a quick follow up question regarding this - how are the small transactions reported? Are they little capital gains (i.e. on the 1099)? If so, if the price of gold goes up and down throughout the year, do some of the gains/losses cancel each other out?

Yes, that's exactly how it works. Basically, each lot sells off a small fractional amount every month and the proceeds are tracked against the cost basis. In 2018 I had a bunch of gains/losses for pennies each that added up to a net long term loss of a few dollars. It would be a real pain if I had to enter all of that manually, but Turbotax imported it all automatically and it was not a big deal.

[era]

I had a quick follow up question regarding this - how are the small transactions reported? Are they little capital gains (i.e. on the 1099)? If so, if the price of gold goes up and down throughout the year, do some of the gains/losses cancel each other out?

Yes, that's exactly how it works. Basically, each lot sells off a small fractional amount every month and the proceeds are tracked against the cost basis. In 2018 I had a bunch of gains/losses for pennies each that added up to a net long term loss of a few dollars. It would be a real pain if I had to enter all of that manually, but Turbotax imported it all automatically and it was not a big deal.

OK, thank you, this is very helpful. I have a couple other questions if thats okay.

Are the individual sales tracked throughout the year somewhere on your Fidelity account? In other words, for example in my Vanguard account, I can go to the tax center any time through the year and look at my "realized capital gains" for the given year. Or do they just come out at the end of the year? If so, are the transactions obvious what they are somewhere in the Fidelity dashboard - or is it not until they get uploaded to TurboTax that they are obvious?

Thanks for the help again.- I am debating opening up a brokerage account with Fidelity just for purpose of taking a position in gold via IAU, I currently use Vanguard for equities via VTSAX.

[era]

I am a fan of Fidelity, but why can't you just buy IAU in your Vanguard account? There is now no commissions there either.

I would definitely prefer that - but based on this thread:
https://www.bogleheads.org/forum/viewto ... 0&t=250680

It does not appear that Vanguard handles gold ETF expense transactions properly.

[Tyler]

Are the individual sales tracked throughout the year somewhere on your Fidelity account? In other words, for example in my Vanguard account, I can go to the tax center any time through the year and look at my "realized capital gains" for the given year. Or do they just come out at the end of the year? If so, are the transactions obvious what they are somewhere in the Fidelity dashboard - or is it not until they get uploaded to TurboTax that they are obvious?

I don't see them in my tax info right now, but I can absolutely see them in my archived final tax statements. Compiling all of that info actually takes a little time for Fidelity, so the final tax info is delayed every year until February or March. If you're the type that wants to do your taxes early, it might be a pain. But if you're patient it's no big deal.

[era]

Are the individual sales tracked throughout the year somewhere on your Fidelity account? In other words, for example in my Vanguard account, I can go to the tax center any time through the year and look at my "realized capital gains" for the given year. Or do they just come out at the end of the year? If so, are the transactions obvious what they are somewhere in the Fidelity dashboard - or is it not until they get uploaded to TurboTax that they are obvious?

I don't see them in my tax info right now, but I can absolutely see them in my archived final tax statements. Compiling all of that info actually takes a little time for Fidelity, so the final tax info is delayed every year until February or March. If you're the type that wants to do your taxes early, it might be a pain. But if you're patient it's no big deal.

Thank you for the quick and detailed response. Very helpful.