What is Tax Estimate?

Tax Estimate represents an approximate figure that provides insight into potential tax liabilities and the impact on your net worth if you were to liquidate your assets today.

For example suppose you bought an asset for $1,000 and its current value is $1,500. The $500 increase in value represents an unrealized gain. Essentially, it represents a paper profit, as the gain has not been realized through an actual transaction.

In the above example, if you were to sell the asset at its current price of $1,500, the $500 unrealized gain would transform into a realized gain, potentially resulting in a tax obligation of ~$150. Effectively making the asset’s net value as $1,350.

Go to Asset details > Assorted > Tax Estimate to manage this.

Is there a way to set the default tax rate?

On the dashboard, click on the Tax Estimate number > A popup opens showing the break up > Click on the setting icon on the top right > Change the default tax rate.

Can the cost basis in 'Returns' and 'Tax Estimate' be different?

Yes. The Cost basis on the 'Tax Estimate' section inherits the number from the 'Returns' tab by default, but you can enter a different cost basis for the tax calculation and it wont mess up your Returns. The cost basis in the Returns will be retained.

Remember

The Tax Estimate feature isn’t meant to be a sharp tax planning tool. It’s simply a way to estimate how much tax you’d owe if you were to sell everything today—effectively showing your net worth adjusted for potential tax payable. You can see both the total estimated tax and the adjusted net worth right on the dashboard.

This figure doesn’t need to be precise.

You can choose to enter this for any asset you like. It’s entirely up to you whether to do it for all assets or just those you might sell in the near future, like stocks.