Comments on: How to Calculate Tax Equivalent Yield http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/ personal finance tips, tricks, and commentary Sun, 22 Nov 2009 04:49:32 -0500 http://wordpress.org/?v=abc hourly 1 By: Taxrascal http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/comment-page-1/#comment-126077 Taxrascal Sat, 18 Oct 2008 00:36:14 +0000 http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/#comment-126077 Michael, The fund probably purchases only tax-exempt securities. Michael,

The fund probably purchases only tax-exempt securities.

]]> By: nickel http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/comment-page-1/#comment-126063 nickel Thu, 16 Oct 2008 20:25:21 +0000 http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/#comment-126063 Jim: Thanks for clarifying the tax treament. I've been swamped all day and didn't see this until just now. Jim: Thanks for clarifying the tax treament. I’ve been swamped all day and didn’t see this until just now.

]]> By: Jim http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/comment-page-1/#comment-126062 Jim Thu, 16 Oct 2008 20:19:55 +0000 http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/#comment-126062 Robert, You don't have to itemize to see savings for tax exempt interest. When you report your interest gains you report them on lines 8a for taxable interest or 8b for tax exempt interest. The value in 8b from tax exempt interest is not added to the gross income so its not considered taxable income. I think you're probably thinking of the deduction from home mortgages. Interest on homes is a deduction that you have to itemize to see a benefit from. So for that you DO have to itemize to see a tax benefit from it. Jim Robert, You don’t have to itemize to see savings for tax exempt interest. When you report your interest gains you report them on lines 8a for taxable interest or 8b for tax exempt interest. The value in 8b from tax exempt interest is not added to the gross income so its not considered taxable income.

I think you’re probably thinking of the deduction from home mortgages. Interest on homes is a deduction that you have to itemize to see a benefit from. So for that you DO have to itemize to see a tax benefit from it.

Jim

]]> By: ari weinberg http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/comment-page-1/#comment-126061 ari weinberg Thu, 16 Oct 2008 19:21:51 +0000 http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/#comment-126061 Tax-free yields soard due to flight to quality - yes even munis were hit. These yields should come back in line, maybe with Prime and maybe a little above. There are definitely new risks in munis - not widescale bankruptcy, but tighter and less borrowing - given fewer tax revenues and budget cuts among major issuers. Think CA, NY, NJ and MA. Tax-free yields soard due to flight to quality – yes even munis were hit. These yields should come back in line, maybe with Prime and maybe a little above. There are definitely new risks in munis – not widescale bankruptcy, but tighter and less borrowing – given fewer tax revenues and budget cuts among major issuers. Think CA, NY, NJ and MA.

]]> By: Robert http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/comment-page-1/#comment-126059 Robert Thu, 16 Oct 2008 15:37:58 +0000 http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/#comment-126059 Haven't you forgotten a large piece of the puzzle with your yield formula? The only way tax exempt products yield any savings is if the person itemizes their deductions. Otherwise, their 'savings' will be useless. Now, 3.94 is great in its own right. Just wanting to clarify in case readers get excited about something that doesn't apply to them. Haven’t you forgotten a large piece of the puzzle with your yield formula? The only way tax exempt products yield any savings is if the person itemizes their deductions. Otherwise, their ’savings’ will be useless. Now, 3.94 is great in its own right. Just wanting to clarify in case readers get excited about something that doesn’t apply to them.

]]> By: Michael http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/comment-page-1/#comment-126057 Michael Thu, 16 Oct 2008 14:32:46 +0000 http://www.fivecentnickel.com/2008/10/16/how-to-calculate-tax-equivalent-yield/#comment-126057 Good explanation - you could write textbooks! So, how does Vanguard get their products to be tax-exempt? I always thought that was a special privilege enjoyed by state and local government via "muni bonds". Good explanation – you could write textbooks!
So, how does Vanguard get their products to be tax-exempt? I always thought that was a special privilege enjoyed by state and local government via “muni bonds”.

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