Brokerage Accounts

Step 1: Navigate to My Plan > Accounts and Assets and Press Savings.

Step 2: At the bottom of your listed accounts, press "Add an account +"

Step 3: Toggle to "Taxable" and select that this is an Investments/Savings/Checking account

Step 4: Choose if you would like to link the account or manually enter the account info

Step 5: Enter a descriptive account name

Step 6: Enter the current balance

Step 7: Select Capital Gains as the tax treatment

Step 8: Enter the Optimistic and Pessimistic growth rates

Your cost basis is the original investment amount for tax purposes. This is usually the purchase price, adjusted for stock splits, dividends, and return of capital distributions.

Account turnover rate is the percentage of your account that gets traded on an annual basis resulting in realized gain/loss events.

Capital gains are not taxed until they are realized, and this isn’t an issue in your retirement accounts (they have zero cost basis.) Gains in after-tax accounts are taxed at preferential or lower capital gains rates and not ordinary income tax rates. The brackets are 0%, 15% and 20% and depend on your taxable income. You may incur capital gains taxes in a taxable account, when you 1) sell shares, and when 2) there is internal buying and selling in the account. You may enter a turnover rate to account for internal buying and selling in the account.

The tool will take the account balance and cost basis, realize the turnover rate as gains, and tax the gains at your long term capital gains rate. If you are a passive investor, holding ETFs or index funds, the turnover rate will be low or negligible. If you have a managed portfolio, managed fund, or trade frequently the turnover rate will be higher, possibly 10% or more.

The turnover amount is then added to the cost basis in the projections.

You’ll find the annual capital gains distributions on your 1099 DIV and/or IRS Form 1040. Divide the annual capital gains distributions by the prior year-end account value to determine the annual turnover rate

Example: capital gains distributions $3,000 ➗ $100,000 Account Value ＝ 3% Annual turnover rate.

Increase the Rate of Return by the dividend yield and enter the dividend yield in the Turnover Rate. This will increase the balance and the cost basis of the account in your plan projections.

If your plan is modeling drawdowns from the account you may consider this an accounting for dividend income. You may wish to head over to Insights > Taxes > Gross Taxable Income by Source to view the realized gains. If they appear accurate and inclusive of dividends, there is no further action needed. If they seem too low, you may increase your turnover rate.

If you would like to model your dividends as an income stream, you may wish to enter the dividends as Passive Income. When you do this the income will incur state and federal income tax.

You may view your Realized Gains in the Insights > Taxes > Gross Taxable Income by Source Chart.

You may view your Capital Gains Tax Payments in the Insights > Income & Expenses > Estimated Expenses Chart.