NHYDY. Inspector Clouseau would say..... Schedule 3, line 1 (foreign tax credit) gets totaled in Schedule 3, line 1, and carried over into 1040-SR line 20 (in the "taxes and credits" section).
https://www.irs.gov/pub/irs-pdf/f1040s3.pdfhttps://www.irs.gov/pub/irs-pdf/f1040s.pdfMutual funds can always treat taxes the same as office expenses, manager salaries, etc., i.e. as expenses that reduce returns, much as hank described.
Alternatively, they
may be permitted to treat foreign taxes as expenses
you are responsible for. This is a part of a legal fiction where they add those foreign taxes to your actual (hard cash) divs on the 1099-DIV, but also say that instead of handing you that cash they are paying those taxes
on your behalf. That lets you declare the foreign taxes as your expenses, rather than as the fund's.
Most funds paying foreign taxes don't do this. Many supposedly domestic funds have a little bit of foreign investment on which they may be paying foreign taxes - you never see this on your 1099s. Even many global funds don't do this, often because they don't legally qualify.
In order for a fund with foreign exposure to pass through a foreign tax credit, it must elect to do so (
26 U.S. Code § 853),
it must have over 50% of its value at end of tax year in foreign companies (§ 8
53(a)), and it must meet technical requirements of § 8
52(a).
Here's how the IRS describes this:
https://www.federalregister.gov/d/E7-16737/p-17
Treasury FRNs
Treasury FRNs Hi, I have question on tax information of USFR. WisdomTree website has a spreadsheet file with tax information(
https://www.wisdomtree.com/investments/resource-library/fact-sheets-reports#tab-EFFF2124-78F5-46F4-B816-6D4252E4BC97). The data shows monthly dividend including small capital distribution in early December in recent years. If you hold this fund, will the corresponding 1099 Form indicate how much dividend is from treasury(for state tax exempt purpose) among all dividends? Many other treasury ETFs (TBIL, TFLO) publishes how much percentage of earnings are from the treasury, thus not difficult to figure out yourself if not on 1099 form. Thanks.
Vanguard Personal Advisor Services Pretty weak article, and poorly written. Hard to figure out what it is saying anyone holds.
Is it counting ETFs as equities? Asked because it separates out investments in mutual funds (17.
57% advised, 20.10% DIY).
Cash?
5.70% advised, 1
5.71% DIY
after 2022Q1!. Maybe the DIY'ers had the right idea (whether by luck or not, can't tell from report).
While the article does note that the study is based on Schwab's
PCRA brokerage window in employer-sponsored retirement plans (401(k)s, etc.) it does not mention that employees who use brokerage windows tend to be more aggressive investors. Did the study control for that before drawing its
general conclusions about all investors?
CD Rates Keep Rising I see both points on callable vs non-callable. If you are building ladders, predictability certainly matters. But to
@DavidV 's point though, you could buy a
5 year or even a 10 year callable corporate bond from Schwab at ~6.3% and ride the high return until it is called. Just a thought. Not something I've done.
