Create an Account
Brokerage accounts are set up in the same manner as your tax-advantaged accounts, with the ➕, but you’ll select Capital Gains as your tax treatment.
Please see this article if you want to account for dividends and interest from your brokerage account. How do I account for interest and dividends in brokerage accounts?
Step 1: Open the Savings section.
Step 2: At the bottom of your listed accounts, press "Add an account +."
Step 3: 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 (we will be choosing "Manual Entry" for the purposes of this demonstration).
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.
Step 9: Enter an accurate cost basis.
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. Your institution will track that for you.
Step 10: Enter the turnover rate
The turnover rate represents any selling that happens within the account and may incur capital gains taxes. The tool will take the account balance and cost basis, realize that percentage of gains, and tax them 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, maybe 20% or more. See below if you need guidance in determining your turnover rate.
Step 9: Determine if you want to add contributions to the account. If yes, head over to Money Flows.
How do you calculate your Turnover Rate?
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.
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.