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Tax Cuts and Jobs Act
AMT Repeal, for Most
Ghost of a Personal Exemption
Tax Reform’s Wealthy Losers
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Direct eFiling: A Revolution in Tax Preparation
2022 Credit and Deduction Changes
2022 State Pandemic Payments
Tax Basics
Income Tax 101
Your Tax Bracket
Tax Rules for Gifts
Guide to Alternative Minimum Tax (AMT)
Alternative Minimum Tax 101
Top Ten Things that Cause AMT Liability
AMT and Long-Term Capital Gain
AMT Capital Loss Trap
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Making Estimated Tax Payments
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Roth Retirement Accounts
What Hath Roth Wrought
Tax Features of IRAs
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Roth IRA 101
To Roth or Not to Roth
Roth IRA Rules of Thumb
Roth Accounts Are Bigger
Advantages of Conversion
Contributions to Roth Accounts
How to Start a Roth IRA
Basic Rules for Regular Contributions
Qualifying Income for IRA Contributions
Spousal Roth IRA
Roth IRA Phase-Out Rules
Modified Adjusted Gross Income
Backdoor Roth IRA Contributions
Saver’s Credit
Roth IRAs for Minors
Roth IRA for College Savings
Excess Contributions to Roth IRAs
Roth Conversions
Conversion Preliminaries
Conversion Eligibility
Roth Conversion Early in the Year
Partial Conversion
Conversion Consequences
How Much Conversion Tax?
Source of Funds for Tax on Conversion
Periodic Payments and Conversions
Post-Retirement Roth Conversion
Regulation Spikes Annuity Abuse
Isolating Basis for a Roth Conversion
Using the New Basis Isolation Rules
Isolating IRA Basis
Basis Recovery from Employer Plans
Separate Subaccount Treatment
Simple Payout
Recharacterizations
Recharacterization Overview
Recharacterization Rules
Roth IRA Reconversion to Reduce Taxes
Extended Deadline for Recharacterizations
Managing Your Retirement Account
One Rollover Per Year
Roth Distributions
Distribution Overview
Tax-Free Distributions from Roth IRAs
First-Time Homebuyer
Taxable Distributions from Roth IRAs
Distributions After a Roth IRA Conversion
Inherited Roth IRA
Designated Roth Accounts
Designated Roth Account Overview
Roth Account Compared with Traditional Account
Designated Roth Account Compared with Roth IRA
A Roth Account Means More Wealth
Contributing to a Designated Roth Account
Who’s Eligible for a Designated Roth Account?
Rollovers from Designated Roth Accounts
Contributions Over the Limit
Distributions from Designated Roth Accounts
Five-Year Requirement for Designated Roth Accounts
Social Security
Overview of Social Security Retirement Benefits
Covered Wages and Social Security Tax
Social Security Full Retirement Age
Understanding the Social Security Benefit Calculation
Social Security Change When You Work an Additional Year
Choosing When to Start Receiving Social Security Retirement Benefits
Earnings Test for Early Retirees
Social Security Reduction for Early Start
Social Security Increase for Late Start
Understanding Life Expectancy
Taxation of Investments
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Guide to Capital Gains and Losses
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9 Capital Gain FAQs
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Acquiring Stock Through a DRIP
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Capital Loss with Little or No Income
Capital Loss Whipsaw
Claiming a Loss for Worthless Securities
Selling Stock
Basics of Stock Investing
Trade Date and Settlement Date
Last Day to Sell
Multiple Lots of Shares
FIFO: First In, First Out
How to Identify Shares
Cash Received in Mergers
The Wash Sale Rule
Wash Sales 101
Wash Sales and IRAs
Substantially Identical Securities
Wash Sales and Replacement Stock
Wash Sale Matching Rules
Wash Sales and Options
Short Sales and the Wash Sale Rule
Same Day Rule for Wash Sales
Traders and Wash Sales
Selling Mutual Fund Shares
Overview of Cost Basis Methods
Changes in the Averaging Rules
Separate Lots vs. Averaging
Electing a Cost Basis Method
Using the Separate Lot Method for Mutual Fund Shares
Using the Average Basis Method
Changing Cost Basis Methods
Special Rule for Gift Shares
Double-Category Averaging Method
Sales Load Deferral Rule
Shares Held Six Months or Less
Capital Gains Reporting
Covered Securities and Noncovered Securities
Easier Capital Gains Reporting
Planning for Capital Gains
Basic Capital Gain Planning
Using Excess Capital Losses
Mutual Fund Tax Guide
Mutual Funds 101
Mutual Funds and Retirement Savings
Mutual Fund Ordinary Dividends
Capital Gain Distributions
Exempt Interest Distributions
Federal Interest Dividends
Nondividend Distributions
Foreign Tax Paid
Form 2439 Capital Gain Allocations
Other Issues for Mutual Fund Dividends
Tax Guide for Traders
Introduction to Trader Status
Benefits of Trader Status
The Disturbing State of the Law
Definition of “Trader”
Filing as a Trader
IRS Guidance on Trader Taxation
Mark-to-Market Accounting
Identifying Investment Holdings
Making the Mark-to-Market Election (part 1)
Making the Mark-to-Market Election (part 2)
The Section 481(a) Adjustment
Compensation in Stock and Options
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Laying the Foundation
Introduction to Equity Compensation
When Stock is Vested
Fair Market Value of Stock
Withholding on Stock Compensation
Restricted Stock
Grants or Awards of Stock
Buying Employer Stock
Section 83b Election
Sample Section 83b Election
Nonqualified Options
Nonqualified Options in General
Nonqualified Stock Options Before Exercise
Exercising Nonqualified Stock Options
Cashless Exercise of Nonqualified Options
Nonqualified Option Exercise Using Stock
Sale of Stock from Nonqualified Options
Nonqualified Options and Capital Gain
The Sorry State of IRS Guidance on Nonqualified Options
Reporting Sales of Nonqualified Option Stock
Incentive Stock Options
Incentive Stock Options in General
Incentive Stock Options Before Exercise
Exercising ISOs
Cashless Exercise of ISOs
ISO Exercise Using Stock
Early Disposition of ISO Stock
Sale of Mature ISO Stock
$100,000 Limit for ISOs
$100,000 Limit and Early Exercise
Refundable AMT Credit
Employee Stock Purchase Plans
Overview of Employee Stock Purchase Plans (ESPPs)
Buying Shares Through an Employee Stock Purchase Plan (ESPP)
Dispositions of ESPP Stock
Tax Reporting for Disqualifying Dispositions of ESPP Shares
Tax Reporting for Qualifying Dispositions of ESPP Shares
Flipping ESPP Shares
Kids and College
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Taxation of Minors
Tax Returns for Minors
Standard Deduction and Personal Exemption for Minors
Minors Taxed at Parents’ Rates: the Kiddie Tax
Reporting Your Child’s Income on Your Return
Capital Losses for Minors
UTMA and UGMA Custodial Accounts for Minors
Custodial Accounts 101
Advantages of Custodial Accounts
Problems with Custodial Accounts
What Expenditures Are Proper?
Custodial Account Used for Support
The Minor’s Right to the Money
UTMA Regret: When Custodial Accounts Turn Sour
UTMA Regret: Strategies
UTMA Regret: More Strategies
UTMA Regret: Still More Strategies
UTMA Transfer to a 529 Account
UTMA to 529: Making the Transfer
UTMA to 529: Quest for Control
UTMA to 529: Tax Consequences
529 Accounts
Changing 529 Account Investments
Transfer from UTMA Account
Coverdell Education Savings Accounts
Coverdell Accounts Overview
How a Coverdell Account Works
Starting a Coverdell Account
Contributions to Coverdell Accounts
Investments in Coverdell Accounts
Earnings and Losses in Coverdell Accounts
Tax-Free Withdrawals from Coverdell Accounts
Using Coverdell Accounts with Other Tax Breaks
Taxable Withdrawals and Penalty Rules
Moving a Coverdell Account
Changing the Beneficiary of a Coverdell Account
Special Needs Beneficiary of a Coverdell Account
Estate and Gift Tax Treatment of a Coverdell Account
Tax Planning
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Tax Planning in 100 Words
Investing
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Investing in 100 Words
How Bonds Lose Value
Covered Call Caution
ESG Investing: Don’t Get Caught Up in the Politics
Books from Fairmark Press
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That Thing Rich People Do
Capital Gains, Minimal Taxes
Go Roth!
Consider Your Options
Equity Compensation Strategies
Main Menu
Free Online Guides and More
About
Menu Toggle
Privacy Policy
Fairmark Forum Discontinued
Taxes and Investing in Plain Language
More Guides and Other Resources
Menu Toggle
Reference Room
2022 Tax Brackets
2022 Tax Figures
2022 Retirement Contribution Limits
2023 Tax Brackets
2023 Tax Figures
2023 Retirement Contribution Limits
2024 Tax Brackets
2024 Tax Figures
2024 Retirement Contribution Figures
Tax Cuts and Jobs Act
AMT Repeal, for Most
Ghost of a Personal Exemption
Tax Reform’s Wealthy Losers
Tax Filing
Direct eFiling: A Revolution in Tax Preparation
2022 Credit and Deduction Changes
2022 State Pandemic Payments
Tax Basics
Income Tax 101
Your Tax Bracket
Tax Rules for Gifts
Guide to Alternative Minimum Tax (AMT)
Alternative Minimum Tax 101
Top Ten Things that Cause AMT Liability
AMT and Long-Term Capital Gain
AMT Capital Loss Trap
Dual Basis Assets
Estimated Tax
Estimated Tax 101
Who Must Pay
How Much to Pay
Voluntary Payments
Increasing Your Withholding
Making Estimated Tax Payments
Penalty for Underpayment
Relief from Spousal Liability
Spousal Liability in General
Innocent Spouse Rule
Separate Liability Election
Equitable Relief
Community Property States
Injured Spouse Rule
Retirement
Menu Toggle
Roth Retirement Accounts
What Hath Roth Wrought
Tax Features of IRAs
Roth to the Rescue
Roth IRA 101
To Roth or Not to Roth
Roth IRA Rules of Thumb
Roth Accounts Are Bigger
Advantages of Conversion
Contributions to Roth Accounts
How to Start a Roth IRA
Basic Rules for Regular Contributions
Qualifying Income for IRA Contributions
Spousal Roth IRA
Roth IRA Phase-Out Rules
Modified Adjusted Gross Income
Backdoor Roth IRA Contributions
Saver’s Credit
Roth IRAs for Minors
Roth IRA for College Savings
Excess Contributions to Roth IRAs
Roth Conversions
Conversion Preliminaries
Conversion Eligibility
Roth Conversion Early in the Year
Partial Conversion
Conversion Consequences
How Much Conversion Tax?
Source of Funds for Tax on Conversion
Periodic Payments and Conversions
Post-Retirement Roth Conversion
Regulation Spikes Annuity Abuse
Isolating Basis for a Roth Conversion
Using the New Basis Isolation Rules
Isolating IRA Basis
Basis Recovery from Employer Plans
Separate Subaccount Treatment
Simple Payout
Recharacterizations
Recharacterization Overview
Recharacterization Rules
Roth IRA Reconversion to Reduce Taxes
Extended Deadline for Recharacterizations
Managing Your Retirement Account
One Rollover Per Year
Roth Distributions
Distribution Overview
Tax-Free Distributions from Roth IRAs
First-Time Homebuyer
Taxable Distributions from Roth IRAs
Distributions After a Roth IRA Conversion
Inherited Roth IRA
Designated Roth Accounts
Designated Roth Account Overview
Roth Account Compared with Traditional Account
Designated Roth Account Compared with Roth IRA
A Roth Account Means More Wealth
Contributing to a Designated Roth Account
Who’s Eligible for a Designated Roth Account?
Rollovers from Designated Roth Accounts
Contributions Over the Limit
Distributions from Designated Roth Accounts
Five-Year Requirement for Designated Roth Accounts
Social Security
Overview of Social Security Retirement Benefits
Covered Wages and Social Security Tax
Social Security Full Retirement Age
Understanding the Social Security Benefit Calculation
Social Security Change When You Work an Additional Year
Choosing When to Start Receiving Social Security Retirement Benefits
Earnings Test for Early Retirees
Social Security Reduction for Early Start
Social Security Increase for Late Start
Understanding Life Expectancy
Taxation of Investments
Menu Toggle
Guide to Capital Gains and Losses
Capital Gain Basics
Capital Gains and Losses 101
9 Capital Gain FAQs
Capital Gain Categories
Stock Basis and Holding Period
Basis of Stock You Purchase
Acquiring Stock Through a DRIP
Stock Received as a Gift
Acquiring Stock from Your Spouse
Inherited Stock
Property received from 2010 Decedents
Exercising an Option
Option Status: ISO or Nonqualified
Stock from Nonqualified Options
Stock from ISOs
Stock Dividends and Splits
Capital Losses
Capital Loss Limitation and Carryover
Capital Loss with Little or No Income
Capital Loss Whipsaw
Claiming a Loss for Worthless Securities
Selling Stock
Basics of Stock Investing
Trade Date and Settlement Date
Last Day to Sell
Multiple Lots of Shares
FIFO: First In, First Out
How to Identify Shares
Cash Received in Mergers
The Wash Sale Rule
Wash Sales 101
Wash Sales and IRAs
Substantially Identical Securities
Wash Sales and Replacement Stock
Wash Sale Matching Rules
Wash Sales and Options
Short Sales and the Wash Sale Rule
Same Day Rule for Wash Sales
Traders and Wash Sales
Selling Mutual Fund Shares
Overview of Cost Basis Methods
Changes in the Averaging Rules
Separate Lots vs. Averaging
Electing a Cost Basis Method
Using the Separate Lot Method for Mutual Fund Shares
Using the Average Basis Method
Changing Cost Basis Methods
Special Rule for Gift Shares
Double-Category Averaging Method
Sales Load Deferral Rule
Shares Held Six Months or Less
Capital Gains Reporting
Covered Securities and Noncovered Securities
Easier Capital Gains Reporting
Planning for Capital Gains
Basic Capital Gain Planning
Using Excess Capital Losses
Mutual Fund Tax Guide
Mutual Funds 101
Mutual Funds and Retirement Savings
Mutual Fund Ordinary Dividends
Capital Gain Distributions
Exempt Interest Distributions
Federal Interest Dividends
Nondividend Distributions
Foreign Tax Paid
Form 2439 Capital Gain Allocations
Other Issues for Mutual Fund Dividends
Tax Guide for Traders
Introduction to Trader Status
Benefits of Trader Status
The Disturbing State of the Law
Definition of “Trader”
Filing as a Trader
IRS Guidance on Trader Taxation
Mark-to-Market Accounting
Identifying Investment Holdings
Making the Mark-to-Market Election (part 1)
Making the Mark-to-Market Election (part 2)
The Section 481(a) Adjustment
Compensation in Stock and Options
Menu Toggle
Laying the Foundation
Introduction to Equity Compensation
When Stock is Vested
Fair Market Value of Stock
Withholding on Stock Compensation
Restricted Stock
Grants or Awards of Stock
Buying Employer Stock
Section 83b Election
Sample Section 83b Election
Nonqualified Options
Nonqualified Options in General
Nonqualified Stock Options Before Exercise
Exercising Nonqualified Stock Options
Cashless Exercise of Nonqualified Options
Nonqualified Option Exercise Using Stock
Sale of Stock from Nonqualified Options
Nonqualified Options and Capital Gain
The Sorry State of IRS Guidance on Nonqualified Options
Reporting Sales of Nonqualified Option Stock
Incentive Stock Options
Incentive Stock Options in General
Incentive Stock Options Before Exercise
Exercising ISOs
Cashless Exercise of ISOs
ISO Exercise Using Stock
Early Disposition of ISO Stock
Sale of Mature ISO Stock
$100,000 Limit for ISOs
$100,000 Limit and Early Exercise
Refundable AMT Credit
Employee Stock Purchase Plans
Overview of Employee Stock Purchase Plans (ESPPs)
Buying Shares Through an Employee Stock Purchase Plan (ESPP)
Dispositions of ESPP Stock
Tax Reporting for Disqualifying Dispositions of ESPP Shares
Tax Reporting for Qualifying Dispositions of ESPP Shares
Flipping ESPP Shares
Kids and College
Menu Toggle
Taxation of Minors
Tax Returns for Minors
Standard Deduction and Personal Exemption for Minors
Minors Taxed at Parents’ Rates: the Kiddie Tax
Reporting Your Child’s Income on Your Return
Capital Losses for Minors
UTMA and UGMA Custodial Accounts for Minors
Custodial Accounts 101
Advantages of Custodial Accounts
Problems with Custodial Accounts
What Expenditures Are Proper?
Custodial Account Used for Support
The Minor’s Right to the Money
UTMA Regret: When Custodial Accounts Turn Sour
UTMA Regret: Strategies
UTMA Regret: More Strategies
UTMA Regret: Still More Strategies
UTMA Transfer to a 529 Account
UTMA to 529: Making the Transfer
UTMA to 529: Quest for Control
UTMA to 529: Tax Consequences
529 Accounts
Changing 529 Account Investments
Transfer from UTMA Account
Coverdell Education Savings Accounts
Coverdell Accounts Overview
How a Coverdell Account Works
Starting a Coverdell Account
Contributions to Coverdell Accounts
Investments in Coverdell Accounts
Earnings and Losses in Coverdell Accounts
Tax-Free Withdrawals from Coverdell Accounts
Using Coverdell Accounts with Other Tax Breaks
Taxable Withdrawals and Penalty Rules
Moving a Coverdell Account
Changing the Beneficiary of a Coverdell Account
Special Needs Beneficiary of a Coverdell Account
Estate and Gift Tax Treatment of a Coverdell Account
Tax Planning
Menu Toggle
Tax Planning in 100 Words
Investing
Menu Toggle
Investing in 100 Words
How Bonds Lose Value
Covered Call Caution
ESG Investing: Don’t Get Caught Up in the Politics
Books from Fairmark Press
Menu Toggle
That Thing Rich People Do
Capital Gains, Minimal Taxes
Go Roth!
Consider Your Options
Equity Compensation Strategies
crypto
Crypto Still Not Foreign
crypto
IRS has issued new guidance regarding cryptocurrency.
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