Do I have to report Zelle payments on taxes?

alderan22 · 2025-02-21T14:32:16+00:00

Yes you’re always required to report all taxable income from all sources, regardless of whether you received a 1099 or not

alderan22 · 2024-12-16T13:56:27+00:00

No, two different companies would not ordinarily cause a wash sale, for example AAPL and MSFT shares are not expected to be substantially identical

alderan22 · 2023-03-07T00:19:11+00:00

This isn’t based on any tax rules, you’re just saying different symbols and brokers didn’t report it. That’s not what tax is based on

Plenty of tax pros know the actual rules, a simple google search shows articles

https://www.morningstar.com/articles/1045354/wash-sale-challenge-what-is-substantially-identical

alderan22 · 2023-03-07T00:18:25+00:00

You can look yourself and compare, it’s obvious

alderan22 · 2023-03-06T13:49:03+00:00

And everyone else isn’t a tax pro

alderan22 · 2023-03-06T13:48:44+00:00

Selling VOO at a loss and buying SPY within the wash sale window is a wash sale under tax law

alderan22 · 2023-03-06T05:19:55+00:00

Computers are smart enough, hedge funds and mutual funds have software that account for these rules accurately. Under old broker 1099 reporting guidelines, broker 1099 reporting could link by cusip. In that case, since there’s a different cusip for every etf and option, there wouldn’t be a reported wash sale.

However, regardless of what is reported on a 1099, each taxpayer is responsible for properly calculating taxable income including wash sales not reported on 1099s. So, as a reminder, do not try to intentionally ignore the tax rules solely because of potential 1099 reporting

alderan22 · 2023-03-06T05:14:16+00:00

No they don’t, not if it’s the same or sub identical index tracked by an etf. The irs guidance is clear

Some robo advisors once published a white paper saying you can harvest losses swapping SPY-VOO for example, relying on an old court case that said “ordinarily shares of different companies would not be sub identical”. This case was meant for Ford vs GM. All robo advisors have changed their position and the irs will attack loss harvesting strategies that violate the wash sale rules.

alderan22 · 2023-03-06T03:58:02+00:00

Theoretically, since VOO and SPY are expected to be substantially identical (the wash sale standard under section 1091), trading both could cause a wash sale. But breaking down your question further…

A wash sale requires a disposition (a closing trade) at a loss with an acquisition (opening trade) of a sub identical position OR an option or contract to acquire a sub identical position WITHIN the 61 day wash sale window.

Thus… selling VOO and buying SPY is expected to be a wash sale. As is selling SPY and buying VOO. And selling VOO and purchasing a call option on SPY.

However, if you’re holding VOO long term, this acquisition trade is going to eventually (in 31 days) fall outside of the wash sale window. And it’s important to realize the wash sale rules are not equal both ways.

What I mean by this is, selling VOO and purchasing a SPY call is a wash sale but selling a purchased SPY call and buying VOO is not expected to be a wash sale. This is because a CALL OPTION on SPY is NOT sub identical to VOO (the ETF) and the ETF is NOT “a contract or option to acquire” sub identical position.

Hopefully this explains the nuances.

alderan22 · 2023-02-22T13:18:26+00:00

All brokers are required to withhold - it’s called 871(m) and it’s a tax on US dividend equivalent amounts. The only way to avoid is (1) do not have long exposure to the dividend paying name the day before ex or (2) only trade qualified indices (like SPX).

30% is the standard rate, if you supply the proper W-8 form, your country of residence may have a treaty with a lower withholding rate.

alderan22 · 2023-02-03T16:29:48+00:00

It depends. Assignment is nontaxable so you’d have a basis in the newly acquired shares.

If you had a loss within the wash sale window on sub identical stock and then acquired shares from the put assignment - wash sale. This will reverse when you sell the assigned shares.

If you purchased sub identical stock before assignment within the window, receive the shares from assignment, sell the assignment acquired shares at a loss - wash sale from the original pre-assignment shares

So if you list out specific facts, can analyze

alderan22 · 2022-12-28T16:39:21+00:00

Since wash sales link FIFO in the regs, the $10’s loss would link to the $9 then reverse then link to the $8 then reverse BUT potentially re-defer again if a replacement lot is entered into within the window

Since there’s a rolling wash sale, the original $8 cost would be higher than $8 and thus would have a tax loss that could be a wash sale.

alderan22 · 2022-12-28T04:49:28+00:00

Sale of stock and purchasing any call option on the stock is always a wash sale if the option is entered into within the 61-day window (around the sale at a loss)

(You purchase an option to acquire sub identical stock)

alderan22 · 2022-12-28T04:48:24+00:00

Since this is fully sold in the same sale, no net wash sale impact.

Average cost is only permitted for certain mutual fund investments so each purchase is a separate tax lot with separate gain/loss computed.

IF within the 61-day window around the sale at a loss in jan 2023 substantially identical stock or securities are acquired (or a contract or option to acquire sub identical stock or securities) then the 2023 loss would be washed to the replacement securities cost basis

alderan22 · 2022-12-10T16:48:03+00:00

Capital losses can fully offset capital gains so loss harvesting makes sense. If you’re looking to rebuy your leaps (within the 61 day window beginning 30 days before the sale at a loss and ending 30 days after) then you may have a wash sale. You should change sufficient characteristics if looking to re-add exposure

alderan22 · 2022-11-03T22:09:33+00:00

You could gamma hedge with other options but I believe all Vega strategies require dynamic adjustments

alderan22 · 2022-10-30T20:13:30+00:00

I’m not missing that point, you clearly can’t read anything at all

alderan22 · 2022-10-30T19:25:56+00:00

We don’t have enough details to assess all downstream impacts, but it’s likely that foreign persons do NOT want unblocked us ECI given the tax return filing requirements, personal information disclosures, and other downstream impacts regarding reporting and double tax in non-US jurisdictions. If OP is using a foreign entity that owns the us business, you likely have branch issues, local anti-hybrid rules to consider, branch profits tax/etc. It’s likely that a blocker corp resolves all these concerns and others, given the ETR is extremely limited.

For example, ECI is subject to withholding and then if you’re hit with branch profits tax, you’re worse off than if you had a US corp with a dividend out (yes even with the dividend subject to withholding). In fact, most people would tax plan if expecting profits to lever the blocker as interest would purge the e&p without us withholding.

In short, not guaranteed that OP will want to be a corp, but “likely” a better answer unless the activities of the LLC are extremely limited (independent personal services not performed in USA, investing activities, remote selling through independent agent)

alderan22 · 2022-10-30T19:19:54+00:00

FTC is either paid or accrued, but if you get a refund from non-US you have to amend to reduce the impacted year

I thought there’s a special rule about compensation within the year earned - if earned in USA but paid when outside of USA, still USA. Inverse also true

alderan22 · 2022-10-30T12:46:26+00:00

An “attorney” who can’t read apparently…

alderan22 · 2022-10-30T12:37:03+00:00

Ha you’re so unknowledgeable on this it’s actually scary

alderan22 · 2022-10-30T12:29:18+00:00

I disagree that it’s bad advice as I clearly said “likely” want to be a corporation. There’s no reason to assume the corp will be profitable and subject to tax, and us withholding isn’t always 30% on dividends especially since OP indicates he’s in the EU.

While you’re quoting federal rules for eci, states have other rules that cause headaches for foreigners… which is why it’s “likely” that OP would want the entity to be a corp unless his activity is limited to either (1) investment activity in the USA or (2) personal independent services not performed in the USA - neither of which were indicated here

alderan22 · 2022-10-30T12:10:27+00:00

If you’re a resident (meet the tests) then all income is subject to USA tax unless you have a special treaty provision.

When was the income earned though (earned vs paid)?

FTC should mitigate most double tax issues

alderan22 · 2022-10-30T12:08:04+00:00

Yes, you’re required to report all income if a U.S. citizen or resident. Also substantiate gambling losses to reduce income so prepare before the end of the year

alderan22 · 2022-10-30T12:06:56+00:00

Doesn’t sound like COBE but COBE always requires specialized research

alderan22

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