Wealth tax:interest and dividend accruals under stock portfolio, Interactive Brokers

Taxes
1

Hi all, I am doing my 2023 tax declaration and have a question about wealth tax, I only had a bit cash and most of my net worth was with Intercactive Brokers

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This is the situation dated 31 Dec 2023. Here the" Total" equals the sum of the 4 items,

I searched online it seems the interest and dividend accruals are interest and dividend which was accumulated but not yet paid at year end, for example we already know the sum of a dividend for 2023 but it would be paid on Jan 2024. Do you think this should count for fortune? Can I substract these 2 numbers from the toal? my intuition tells me no as we shouldn’t count money I haven’t yet received as my fortune… (this reminds me of accounting principle, like do we input the income when the sales happened or when the money was received)

2

If you have those two numbers big enough to matter, you won’t be here asking. :slight_smile:
Did it make a big difference adding them?

3

Let’s differentiate between interest and dividends.

Interest

In my opinion - Accrued interest is part of net asset value. I included the total in my return.

I believe income tax is typically applied when you receive the interest. But the wealth tax is applied also on the accrued interest.

This number would not make much difference in your actual wealth tax calculation. You can try to simulate.

Dividends

Regarding dividends - I think you need to avoid double counting. If you enter the security in ZHtax software, it would calculate dividends automatically. I actually never saw this number in my statements. Is it possible that you have an ETF which have ex Div date in Dec but paid date in Jan ?

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4

Technically you are taxed on full net worth, current and/or accrued (think of it like this: Every homeowner is deducting his mortgage, despite not yet having paid it :upside_down_face:). So yes, if these positions are significant you should report them. That being said, I think I never heard anyone doing that.

Edit to add for all those that optimize even their wealth tax. Because of this fact of taxing proper net worth, you can deduct unpaid taxes as debt. Even if you pay taxes in advance, most could still deduct the federal tax invoice which typically comes quite late.

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5

We deduct the interest that was paid from the income. And the debt from the wealth, because it is a negative wealth.

And I also don’t add accruals to our wealth for tax purposes. Not that there are many of them. Some brokers might report them, others don’t, so to me it doesn’t make sense to add them to the wealth.

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6

Until the money is not settled on your account it’s technically not yours so no you should not report them. IB adds these lines to take these items into account to calculate margin as they know it is money committed to the client in case of a margin call, that’s a regulatory requirement on their end when valuating how much collateral you offer.

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