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Post by chang on Jan 25, 2022 22:43:29 GMT
Sold entire positions in VT (VG Total World) and NRUC (Exchange Traded Utilities Bond) in taxable. Neither were perfect taxable holdings, and long term capital gains became manageable with recent market selloff, so a good time for some house cleaning. I would have thought VT is darn near ideal for taxable. First, it’s an index fund, so almost no CG distributions. Second, foreign dividends (fairly limited, anyway) are in taxable where you can take a credit for them on your taxes. |
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Post by Deleted on Jan 26, 2022 0:21:41 GMT
Sold entire positions in VT (VG Total World) and NRUC (Exchange Traded Utilities Bond) in taxable. Neither were perfect taxable holdings, and long term capital gains became manageable with recent market selloff, so a good time for some house cleaning. I would have thought VT is darn near ideal for taxable. First, it’s an index fund, so almost no CG distributions. Second, foreign dividends (fairly limited, anyway) are in taxable where you can take a credit for them on your taxes. My understanding from the Boglehead's Forum is that Vanguard doesn't pass on the Foreign Tax Credit for funds that are more than 50% domestic stock, which is why the Bogleheads recommend separate domestic and international funds in taxable. |
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Post by chang on Jan 26, 2022 0:29:16 GMT
I would have thought VT is darn near ideal for taxable. First, it’s an index fund, so almost no CG distributions. Second, foreign dividends (fairly limited, anyway) are in taxable where you can take a credit for them on your taxes. My understanding from the Boglehead's Forum is that Vanguard doesn't pass on the Foreign Tax Credit for funds that are more than 50% domestic stock, which is why the Bogleheads recommend separate domestic and international funds in taxable. That would be odd. Why wouldn't all foreign divs be reported on the 1099? |
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Post by Deleted on Jan 26, 2022 1:05:41 GMT
My understanding from the Boglehead's Forum is that Vanguard doesn't pass on the Foreign Tax Credit for funds that are more than 50% domestic stock, which is why the Bogleheads recommend separate domestic and international funds in taxable. That would be odd. Why wouldn't all foreign divs be reported on the 1099? I don't know why, but I did verify no FTC for VT is correct by downloading the PDF "Vanguard funds that are eligible for the foreign tax credit", which can be found at: investor.vanguard.com/investor-resources-education/taxes/funds-tax-information |
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Post by Deleted on Jan 26, 2022 5:45:36 GMT
It's interesting that from the PDF, funds of funds like the Target Date and Lifestrategy series are eligible for the tax credit. Others with just as significant foreign holding like VT and Global Wellington and Wellesley are not.
I wonder if this is the same for all fund companies or Vanguard specific.
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Post by chang on Jun 25, 2023 15:38:39 GMT
My understanding from the Boglehead's Forum is that Vanguard doesn't pass on the Foreign Tax Credit for funds that are more than 50% domestic stock, which is why the Bogleheads recommend separate domestic and international funds in taxable. This is worth a bump. Vanguard's 1099s do not include foreign taxes paid for many funds, such as VT (Vanguard Total World Stock ETF), VGWAX (Vanguard Global Wellington Fund), or VGYAX (Vanguard Global Wellesley Income Fund), which have significant foreign stock exposure (including foreign dividend-paying stock exposure). This is nuts -- these funds are 40-50% foreign. And yet, VG does provide foreign tax information on funds like STAR and the Life Strategy and Target Retirement funds, which have a minimal amount of foreign exposure. I keep foreign dividend payers in a taxable account specifically so that a foreign tax credit can be claimed. (Fund of choice: SCHY.) For this reason, I would always replace VT with VTI + VXUS in a taxable account.
See here which funds VG does provide foreign tax information for: www.vanguard.com/pdf/FTC_2023.pdf"Vanguard prepares IRS Form 1099-DIV that lists, among other things, the portion of taxes paid to foreign countries, when the Fund passes the Foreign Tax Credit to its shareholders. If you did not receive a Form 1099-DIV or need additional information to prepare federal and state income tax returns, use the table below to arrive at the required amounts. For those funds that offer ETF Shares, the name of the ETF and its ticker symbol are also listed." |
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