Does the estate tax impact net out the way you had intended?
It nets out exactly consistent with what we did tell them to do in June, and is an acceptable result. It is not the same as it would have been if nothing had changed from what Vanguard had done in June and July.
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Final (hopefully) report: they screwed it up again. They got the shares fixed, just fine. And they correctly determined that we (since they had not transferred the shares they should have) received more dividends than we should have in June, Sept and Dec (fund pays dividends quarterly). So they should take those dividends away from us and give them to XXX. So far so good.
XXX has dividends reinvested in the fund, and they did that right: using all the dividends adjustments to buy more shares, at the correct prices.
We do not have dividends reinvested, but they treated it as if we had. So they cancelled shares, that we hadn’t bought with dividends, to recover the dividends, and canceled them at the prices when the dividends were paid last year. WRONG.
I called again to complain. Their dividend department will review, and the person I was speaking with (whose department was in charge of fixing the original transfer error but not with fixing any of the subsequent dividend processing) expects that they will fix it.
Something I didn’t complain about, though it will end up very slightly wrong. Since XXX had an increase in shares due to reinvesting his June dividend, he should have gotten a slight increase in Sept dividend; similarly in Dec. A clear conceptual error but the $ effect is less than $1, so I didn’t even bring that up.
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Maybe this will be the last report, but they still haven’t gotten everything right. I had printed a 1099 from their site, labeled “CORRECTED 03/03/2022” which looked right to me, And it shouldn’t have changed when the changed our dividends away from reinvested in the fund, since they didn’t pay any dividends on the reinvestments (even though they should have paid a very small amount.)
Since then I have received, in the mail, a “CORRECTED 03/07/2022”, a “CORRECTED 03/08/2022” and “CORRECTED 03/09/2022” 1099-V. All compared to the 03/03 version, dividends were first +318.57, then +104.57, finally -0.02. No idea why those variations existed, nor why they thought they were final enough to mail out (and the final is essentially right, back to where they were 3/3).
But the strangest thing on the new ones: they started including a row for the money market fund where our index 500 dividends were being reinvested. Presumably no row before because the dividends in that fund were under $10 (as they were). And they should be trivially smaller now since we earned less in the index 500 fund, therefore had less in the money market. Now somehow our 1099 shows we earned 2.17 of capital gains dividends in that account. WTF? There have been cases, very rare, when money market funds get capitat gains of 1 cent per 1000 invested.but I don’t think this fund distributed any in 2021. Also, the 3/7 1099 still showed 0 cap gains. Then 3/8 showed 1.68. Then 3/9 showed 2.17. I’m not sure whether I’ve gotten any additional assets in the account to reflect these gains I’ve supposedly received. Already spent way more time trying to understand their bizarre screw-ups than the amounts justify. [When I started typing today, I had the dates on the corrected 1099’s confused, and thought they still were wrong by over $100. But now I realize that the latest 1099 is close enough.)
When I read posts like this, obviously we get way more detailed about optimizing things than an average human. Then I think of people like my brother who at 37 just realized that credit cards don’t charge interest unless you carry a balance and I wonder how people navigate even basic income taxes.
Then again he didn’t file for like a decade so maybe that’s my answer.
You would be surprised. Actual quotes:
(No, he was not joking.)
(I mean… he didn’t have to… only if he wanted me to prepare his income tax return for him.)
(I’m a little more sympathetic here, but, no.)
And my personal favorite:
Don’t even get me started on Married Filing Jointly vs Married Filing Separately…
Serious question: Under what circumstances would a married couple file as Married Filing Separately?
p.s., that was serious popcorn, too. I’m trying to get you started on what sort of cockamamie ideas people have about their filing status.
Sometimes itemized deductions make it better, or if medical expenses of one can be deducted more efficiently based on lower AGI.
Often it’s done to avoid liability of the other spouse, think still married but separate (could be not talking let alone sharing tax info)
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Put another way: medical expenses become deductible when they pass 7.5% of AGI, and federal disaster losses when they pass 10% of AGI. If they’re large enough to justify not taking the standard deduction, but not large enough to reach the threshold when compared to combined AGI…
I wouldn’t be surprised if there’s also a scenario where spouses live in different states without income tax reciprocity and/or significantly different tax rates, and where one of the states requires MFS/MFJ status to match federal.
Well this year there’s a quasi scam going onn(something that’s totally legal but IMO shouldn’t be).
Suppose couple with 2 kids has joint income of $200,000. He makes $140,000, she makes $60,000.
Their third stimulus would be $0 because they make over $150,000 and they filed jointly in 2020 so they didn’t get any stimulus in March 2021 when the third round came out.
But if they file separately she is under $75,000 so at least she can get her $1,400. And she can claim both kids and get the $2,800 for the kids for a Rebate Recovery Credit of $4,200.
That’s not too scammy… yet. But it gets better.
Different couple with 2 kids and their 2020 income was only $100,000 so they already got their full $1,400 * 4 = $5,600 of stimulus. Legally that is $2,800 hers and $2,800 his, and this is how they must report it.
Now if they file 2021 separately, and she takes both kids she is entitled to $4,200 of stimulus and she only got $2,800 so she gets a Rebate Recovery Credit of $1,400. Hubby is only entitled to $1,400 and he got $2,800 but since his income is low enough, he does NOT have to pay the extra $1,400 he received back.
That’s a little scammy IMO. They are 4 people and they’ll essentially get 5 stimulus’s.
So that’s a big reason we see a lot of MFS this year. Your tax dollars at work!!!
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Other reasons for MFS:
One person has high medical expenses subject to the 7.5% income threshold. By filing separately the expenses in excess of 7.5% of their own income can be deducted, without the spouse’s income bumping up the floor.
Prior to TCJA you had the same concept with miscellaneous deductions subject to the 2% threshold. Hubby & I filed separately because he had a crap ton of unreimbursed employee expenses. My unreimbursed employee expenses are typically $0.00.
There can be state benefits to filing separately. Ohio (where my folks live) has a graduated tax rate but only one tax table whether married filing jointly or separately or single. So tons of Ohioans file separately for that reason.
The minimum amount of student loan repayments is calculated based on income, so sometimes filing separately can result in a lower loan payment. You don’t get to deduct the interest if you file separately, but if your joint income is too high to deduct it or too low to see much benefit from the deduction then you might want to file separately for that reason.
If your joint income is too high to get the Child Tax Credit you might get it by filing separately.
There’s others, but those are some common ones.
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Just came across another reason for married filing separately today. Actually I think I’ve seen it before, but I learned a little more about it today.
Apparently there is a student loan forgiveness program out there for people who go into public service. As I understand it you take out as many loans as you want, and then if you work in any type of public service (federal, state, local government, public school districts… not sure about military) for 10 years then whatever balance is left on your student loans at the end of 10 years is forgiven.
But the catch is that there are income limitations and your spouse’s income on a joint return can impact your eligibility. (Which seems counter to my understanding of the goal of the program, which is to encourage people to go into public service, but I don’t make the rules.)
So today I had a couple where they were like $1,500 better off filing jointly, but they insisted on filing separately due to the student loan forgiveness issue.
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Just out of spite! Take that, government!!!
How much student loan debt were they looking at?
Future potential innumeracy thread nominee, right?
Tangent, but some of the loan forgiveness programs have been plagued by some hard to adhere to administrative burdens.
Apparently more than $1,500. 
She didn’t have to make payments in 2021 due to some Covid issue, but her 2020 interest was like $3,700 & change. I think she’s on an interest-only plan. At 6%, that’s just shy of $62,000. Give up $1,500 now to get $62,000 later is a sound choice.
I’m making up 6%. I think that’s the rate hubby was paying before we got his loans paid off.
The actual payoffs from this is abysmally low. I’m fairly sure it was in the single digits (percentage-wise) of the people who expected it, but no time to research this morning.
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I think the largest burden is working a low paying public service job when they could just make more in the private sector
Unless loan amounts are in the hundreds of thousands it probably won’t take long for a larger pay package to outpace loan forgiveness in terms of attractiveness
100%. Even worse, I have multiple friends who work in Christian private schools. They complain about making salaries around $25k/year and I’m sad for them but just have to be, “Yeah, I know, you guys are so underpaid!” while never mentioning my salary.
Some teachers are great but we are pushing low-paid employees to one of the most important sectors of our long-term wellbeing.
Yeah, I doubt the math works out if you were, say, debating between being a math teacher and an actuary and indifferent to which kind of work you preferred.
But it does make math teacher or social worker or Medicaid clinic physician slightly more affordable careers.