For the past two weeks we've been talking about the new high-yield money market deposit accounts and Super-NOW accounts being offered by banks and savings and loan associations.
Both are expected to pay more than the 5-plus percent you have been getting on regular passbook or NOW accounts.
There is a third major type of depository institution that you shouldn't overlook, if you are eligible to participate. Many federal credit unions offer similar accounts that pay market rates for your money.
In fact, the credit unions had a head start on the banks and S&Ls. The CUs were deregulated last April, and have more freedom to set their own rules than the other institutions have even now.
According to Credit Union Newswatch, a publication of the Credit Union National Association, a credit union in Dallas has been offering a "super share draft" account since last September that is paying market rates on balances above $1,500 and regular share draft account dividends on balances below that.
(A "share draft" is the credit union equivalent of a negotiated order of withdrawal--NOW--which in turn is really no different from the old familiar personal check.)
Another credit union in that area just initiated a new "Share Draft Plus" account to pay at least 11 percent on balances above $2,500--the minium deposit amount for either the money market deposit account or the Super-NOW.
Of course, not everyone is qualified to join a credit union. But in the Washington area there is certainly a large percentage of people eligible for membership.
Question: During 1982 I realized a short-term capital loss from the sale of tax-free mutual fund shares. The dividends paid during the nine-month period I owned the shares were reinvested in additional shares. When closed out, the total cash return was about $2,000 less than the original cost plus reinvested dividends. May I claim this capital loss on my tax return even though it was from the sale of tax-free shares?
Answer: Yes, you may claim the entire $2,000 on Schedule D of your tax return. The tax-free nature of the investment relates only to the dividend income and not to capital gain or loss on disposition.
And you're figuring the loss the right way. For mutual funds or individual stocks on which the dividends are automatically invested in additional shares, the cost basis for figuring capital gain or loss is the cost of the original shares plus the total or all reinvested dividends.
Q: I would like to know if I have to send in estimated tax if my only income is interest from a savings and loan association. Or must can I have to send in estimated tax if my only income is interest from a savings and loan association. Or can I wait and send it all in by April 15 each year?
A: If you estimate that your total tax liability next April will be less than $300, then you can wait until then when you file your 1983 tax return and pay the whole bill at that time.
But if you expect your tax balance for the year to be $300 or more and no tax is withheld from any of your income, then you must file an estimated tax return and make quarterly payments.
Keep in mind that the picture changes this year on savings and loan interest (as well as interest from other sources). Starting July 1, 1983, your S&L will start to withhold tax from your quarterly interest payments, at the rate of 10 percent.
There are provisions to avoid withholding, depending on your filing status, age and 1982 tax liability. But if withholding of tax on the interest will bring your net liability below $300 and eliminate the need for an estimate, that seems to be the easier way to go.