Tabulate capital gains annually - not quarterly
Q I want to find out about paying capital-gains taxes on stock I recently sold. Do you have to pay the government an estimate of the taxes you owe per quarter when you sell stocks? Could you tell me the dates it must be turned in by to avoid a penalty? I would like to sell some tech stocks that I own for a loss, to offset the profit on the first stock.
E.W., Alexandria, Va.
A "It sounds like you are off the hook until the end of the year regarding the capital-gains taxes," says David Bendix, who heads up financial firm Bendix Financial Group in Garden City, N.Y.
That holds true even if you pay taxes on a quarterly basis, he says.
The reason for paying capital gains taxes annually, says Mr. Bendix, is that if you plan to offset your gains with losses taken on the sale of tech stocks - which you have yet to sell - you would treat the entire series of transactions as one whole.
However, if you owe back taxes and penalties to the Internal Revenue Service that could cloud your situation.
If that is the case, ask the IRS how you should file your capital-gains transaction, Bendix says.
Q I have been disabled since 1984. When I left work, I was not allowed to touch my retirement money. I worked for a nonprofit agency that did not pay into Social Security at that time. We had a long-term disability plan with an insurance company in Maine. If I ever touch the retirement money, my disability pay stops. My retirement money is with an insurance company here. Over the years, my employer has sent me forms to close out my retirement account. I have to keep reminding them that if I do so I will lose my disability pay. What can I do?
M.M., San Francisco
A "Double check with your employer and disability insurer to make certain you are correct regarding the terms of your disability payments," says Gary Schatsky, an attorney and fee-only financial planner in New York. If the terms are correct, "keep the disability payments going as long as you can."
If your retirement plan is tax-sheltered, such as a 403(b), have it transferred to an IRA carrier. The transfer should not affect your disability checks, he says. If not tax-sheltered, leave it alone while you take the disability checks.
(c) Copyright 2001. The Christian Science Monitor