Answers to your questions on tax forms, IRA contributions, capital gains, and more
February 21, 2014
Here are answers to some questions we've received from clients recently, along with links to additional information and helpful resources on vanguard.com.
Where are my Vanguard tax forms?
Most forms are now available. We publish tax forms in our secure Tax Center as soon as they're ready. If you still receive paper copies of your tax forms by mail, you should receive them shortly after they're posted online.
About the Medicare investment tax ...
A new Medicare tax resulting from the 2010 federal health care law is now in effect for investors filing their 2013 returns. Here's a look at what the change may mean for you.
If you've added tax forms to your Vanguard e-service package, you won't be receiving paper copies of your forms. Instead, we'll send you an e-mail as soon as the forms are available online.
Note: If your dividend or capital gains distributions amounted to less than $10 for the year, you won't receive Form 1099-DIV for the investments in question. This is particularly likely for money market funds, because historically low interest rates have pushed money market yields down in recent years.
Is Vanguard offering discounted access to TurboTax this year?
Yes. Most Vanguard clients can receive discounts of up to $20 off Intuit's regular list price on TurboTax® tax-filing software. Flagship Services and Asset Management Services clients receive complimentary access to the Federal: Basic, Federal: Deluxe, and State: Basic products. This year only, Flagship and Asset Management Services clients will also receive complimentary access to the Federal: Premier online version.
Before getting started, you may wish to use TaxCaster, Intuit's free online calculator, to project your federal income taxes.
Can I still make an IRA contribution for 2013?
Yes, provided you meet the income eligibility requirements and you're still under the annual contribution limit for your account. The last day to open a new IRA or contribute to an existing IRA for the 2013 tax year is Tuesday, April 15, 2014.
When making your contribution, please be sure to indicate whether it's for the 2013 or 2014 tax year.
Investing by mail?
|Regular U.S. mail||Registered, certified, or overnight mail|
P.O. Box 1110
Valley Forge, PA 19482-1110
455 Devon Park Drive
Wayne, PA 19087-1815
How much can I contribute to my retirement account?
For the 2013 and 2014 tax years, the contribution limits for IRAs (both traditional and Roth) and 401(k)-type employer-sponsored retirement plans are as follows. Note that the limits are higher for those age 50 and older.
|2013–2014 contribution limit|
|Traditional IRA and Roth IRA||$5,500|
|Traditional IRA and Roth IRA (age 50 and older)||$6,500|
|401(k) and 403(b) plans||$17,500|
|401(k) and 403(b) plans (age 50 and older)||$23,000|
Did my funds distribute capital gains in 2013?
Finalized year-end dividend and capital gains distributions for Vanguard funds are now available:
- Distributions for Vanguard mutual funds »
- Distributions for Vanguard ETFs® »
- View your personal dividends and capital gains »
Note: Early in 2014, some funds will report "supplemental" income dividends or capital gains distributions for 2013. These distributions will be reported on next year's tax forms. Because supplemental gains are taxable for the year in which they're declared, Vanguard won't generate updated tax forms for 2013.
What is "cost basis" and why do I need to know about it?
Generally speaking, cost basis is the price you originally paid for an investment. It includes adjustments such as reinvested dividends and capital gains, along with any sales commissions or transaction fees. If you sell shares from a nonretirement (taxable) mutual fund account or brokerage account, you must report the cost basis of those shares to the IRS.
All sales of mutual fund shares you made since January 1, 2012, generate a Form 1099-B that includes your cost basis information. If you sold investments from your brokerage account in 2013, you'll receive a consolidated tax package that includes your cost basis information.
If you haven't already, you can set your preferred cost basis method for any shares you buy and sell going forward. The method you choose can affect your capital gains or losses and can influence how much you owe in federal taxes. So it's particularly important to know your tax situation when choosing a method. For mutual fund shares you bought before January 1, 2012, and then subsequently sold, Vanguard uses the average cost method.
You have the following cost basis method choices:
- Average cost. Calculates the average cost for each share you own.
- First in, first out. The first shares you acquired will be the first ones we sell.
- Specific identification. At the time of sale, you choose the shares (or lots) to sell, which will determine your capital gains or losses.
What are RMDs and how do I schedule my distributions?
If you're age 70½ or older, you're required to withdraw a minimum amount each year from your tax-deferred retirement accounts, including IRAs (with the exception of Roth accounts) and qualified employer-sponsored retirement accounts. Failure to take your required minimum distribution (RMD) by the deadline—generally, before market close on December 31 of the year in which you reach age 70½—may result in a hefty IRS penalty.
Once you reach age 70½, Vanguard will automatically calculate your RMD amount for you each year for your tax-deferred IRAs and employer-sponsored retirement accounts held at Vanguard. However, you'll need to contact us to actually make the withdrawals. Or, to make the RMD process simpler, you can schedule automatic RMD withdrawals using our free service. If you don't need your RMD for living expenses, you can keep it working for you by immediately reinvesting it in a Vanguard nonretirement account.
What should I do if I've forgotten my vanguard.com user name and password?
Information security is very important to Vanguard—and to our clients—and we rely on stringent procedures to protect sensitive personal information.
If you've forgotten your vanguard.com user name, go to our Forgot user name screen to verify your identity and we'll send your user name to the e-mail address you provided when you registered.
If you've forgotten your password, go to our logon page and select Set up your user name and password. Once you verify your identity, we'll issue you a temporary password. After logging on with your temporary password, you'll set up a new, permanent password.
- All investing is subject to risk, including the possible loss of the money you invest.
- When taking withdrawals from an employer-sponsored plan or traditional IRA before age 59½, you may owe ordinary income tax plus a 10% federal penalty tax.
- An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.
- Please consult an independent tax or financial advisor for specific advice about your individual situation.
- Vanguard Brokerage Services is a division of Vanguard Marketing Corporation, member FINRA.
- Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered, limited-purpose trust company operated under the supervision of the Office of the Comptroller of the Currency.
- Intuit, the maker of TurboTax and TaxCaster is not affiliated with Vanguard. Vanguard doesn't guarantee the accuracy of TurboTax or TaxCaster and accepts no responsibility for the data this service provides.
- The information you provide to Intuit when you use TaxCaster is confidential and secure. Intuit won't use this information for any purpose other than estimating your income taxes.
- Vanguard cannot provide technical support for TurboTax or TaxCaster.
- Links to third-party websites will open new browser windows. Except where noted, Vanguard accepts no responsibility for content on external sites.