I work for a company and every week I deduct $20 from my paycheck and it goes towards purchasing company stock. I needed some money this year and I sold $2,600 worth of it so my quesion is am I going to have to pay taxes on all of this $2,600 or just profits (if any because I have no idea how much I paid in but I know I didn't make much in profits)?
2006-11-04 20:12:29 · 4 answers · asked by Dean L 2 in Business & Finance ➔ Taxes ➔ United States
1. You must calculate what you paid for the stock...and take the oldest stock you purchased, and your company must tell you the price you paid.
2. You take the price you sold it for $2,600 less the price you paid, and let's use $2,200 for the price you paid, and this leaves a profit of $400. This is reported on a Schedule D of your 1040.
3. It is up to you to find out what you paid. The IRS does not care if you have to call a stock broker...and look at your paystubs to find out when you first started to buy this stock.
Find out what the company charged you for the stock.
4. Find out if the company charged you a fee to purchase the stock and always add any fee charged to the cost of the stock.
5. The price you received ($2,600 in this case) then has the fee charged to sell the stock subtracted perhaps $50 to sell the shares from the profit.
$2,600 less $50 = $2,550 received
Less Price Paid $2,100
Profit $450..........and all of this is listed on the Schedule D of your 1040 tax return.
6. In some cases (if the stock has not fluctuated much over the years), and you can't find the exact price paid, you may use the average cost per share to calculate the price paid to buy the stock. So if the stock averages $10/share over 3 years, you may use the cost of $10/share x the number of shares sold to get your purchase price.
If you have any questions, you can look at the IRS instructions for Schedule D, and they are included in the 1040 package.
This amount is too small to waste any money having anyone calculate this for you. It's actually not that hard once you get the understanding. Then you will keep your pay stubs (forever or until you sell all of the stock) to show what you paid for the stock.
2006-11-05 03:27:26 · answer #1 · answered by May I help You? 6 · 1⤊ 0⤋
You would pay tax on the gain on the shares you sold: shares x (sales price - purchase price) 50 x ( 20-10) = $500 profit You will pay capital gains tax on $500. If you owned the stock less than a year, you would pay tax on that income just as you would any income. If you owned the stock more than a year, you would only have pay long term capital gain which this year is either 0% or 15%.
2016-05-22 00:36:54 · answer #2 · answered by Anonymous · 0⤊ 0⤋
In a company stock purchase plan you are buying shares with after tax dollars. This means that you only pay tax on any gain on sale.
You will need to determine how long you have held the shares you sold. if less than one year then this gain will be short term taxed at your regular tax rate. If held more than a year the gain will be long term taxed at 10% or 15% depending on your other income.
Then you have to determine your gain. You elect to have sold the first shares you bought(probably the most gain). You could elect to have sold the last shares you bought (probably the least gain). Or you could assume that you have used your average cost of all shares you hold.
Good Luck!
2006-11-04 21:57:21 · answer #3 · answered by waggy_33 6 · 1⤊ 0⤋
Do you get a discount on the stock when you purhcase it? That will impact the answer if you have not held the stock for two years. In a qualified stock purchase plan you normally get a discount on the price of the stock.
This discount is taxed as ordinary income if you did not hold the stock for two years. If held for longer than two years it will qualify for the capital gain rates.
More detail would be needed to accurately anwer your question.
2006-11-05 07:12:10 · answer #4 · answered by BHWMST 3 · 1⤊ 0⤋