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Muni Bond ETFs looking good?
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dumbstruck
Mar 13, 2016, 9:00:04 PM3/13/16
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Here are some muni observations that puzzle me...
Muni bond funds recently seem to have some of the steadiest preservation of capital of all the bond types that I track, in spite of the Puerto Rico implosion. PR (and VI) is a critical part due to non-state-taxability, yet muni funds such as HYD and HYMB no longer seem to report their exact tax-year percentage on their web sites (just impressionistic snapshots at inconvenient time frames).
It looks like turbotax no longer lets you plug in the state-exempt amount, like 9%, in the fed input part of the process. You have to hack it into an "other subtractions" part of the state return.
In the last 365 days, most bond etf type values have converged to unchanged (last 2 years a slight gain). Exceptions were the junk bonds cratered, bank loan etfs were weak, and corp a bit soft. Treasury TLT very volatile, but along with SPY stocks netted around zero change excluding dividends. So with munis yielding 4+% and prices steady, maybe they are good even aside from fed tax benefits and a bit of state tax benefits (there isn't a "my state" etf)?
Muni bond funds recently seem to have some of the steadiest preservation of capital of all the bond types that I track, in spite of the Puerto Rico implosion. PR (and VI) is a critical part due to non-state-taxability, yet muni funds such as HYD and HYMB no longer seem to report their exact tax-year percentage on their web sites (just impressionistic snapshots at inconvenient time frames).
It looks like turbotax no longer lets you plug in the state-exempt amount, like 9%, in the fed input part of the process. You have to hack it into an "other subtractions" part of the state return.
In the last 365 days, most bond etf type values have converged to unchanged (last 2 years a slight gain). Exceptions were the junk bonds cratered, bank loan etfs were weak, and corp a bit soft. Treasury TLT very volatile, but along with SPY stocks netted around zero change excluding dividends. So with munis yielding 4+% and prices steady, maybe they are good even aside from fed tax benefits and a bit of state tax benefits (there isn't a "my state" etf)?
dumbstruck
Mar 15, 2016, 10:10:04 PM3/15/16
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Investment observations after doing fed taxes with a lot of cap loss harvesting:
- Muni dividends are included for purposes of health care subsidy denial.
- Non muni but exempt dividends can be taxed at a really low rate; even 0. I can't follow the worksheet gyrations, but could one make a low tax but comfortable living on primarily exempt dividends (maybe AMT would strike)? Not that it would help me much, because state income tax rate has been approaching and now exceeds fed rate for me!
- Muni dividends are included for purposes of health care subsidy denial.
- Non muni but exempt dividends can be taxed at a really low rate; even 0. I can't follow the worksheet gyrations, but could one make a low tax but comfortable living on primarily exempt dividends (maybe AMT would strike)? Not that it would help me much, because state income tax rate has been approaching and now exceeds fed rate for me!
David S. Meyers, CFP(R)
Mar 23, 2016, 1:30:04 PM3/23/16
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On Tuesday, March 15, 2016 at 7:10:04 PM UTC-7, dumbstruck wrote:
> Investment observations after doing fed taxes with a lot of cap loss harvesting:
>
> - Muni dividends are included for purposes of health care subsidy denial.
They are also included when figuring out how much of one's SS is taxable.
> Investment observations after doing fed taxes with a lot of cap loss harvesting:
>
> - Muni dividends are included for purposes of health care subsidy denial.
> - Non muni but exempt dividends can be taxed at a really low rate; even 0.
dumbstruck
Mar 23, 2016, 4:10:04 PM3/23/16
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On Wednesday, March 23, 2016 at 7:30:04 AM UTC-10, David S. Meyers, CFP(R) wrote:
> Do you mean "qualified dividends" ?-- typically paid by a corporation and taxed similarly to long-term capital gains - which does have a 0% bracket for folks whose ordinary income is in the 10 and 15% brackets (i.e., for a single person, under around $38k)
Yes, the qualified rate apparently applies to dividends beginning either 60 or 90 days after your purchase of common or preferred stock. For middle incomes they may be only taxed at around 15% vs twice that for corp bonds or tbills (latter not taxed by most states tho, I guess).
> Do you mean "qualified dividends" ?-- typically paid by a corporation and taxed similarly to long-term capital gains - which does have a 0% bracket for folks whose ordinary income is in the 10 and 15% brackets (i.e., for a single person, under around $38k)
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