How much will I pay in taxes?

Question

I am new to trading..got lucky a couple of times and I profited about 10k this past year and about 16k form my military paycheck. I got a paper from my broker that says capital gains/losses 177k.... I put those numbers in a tax calculator and it says that I will have to pay 38k in my tax return..Geez im scared, How much will I really pay in Taxes? Please help my wife and I with this she is scared that we might have to declare bankruptcy. Thank you in advance for your advice...ohh if it helps we have one dependent and shes a student and only made about 4k for the year so that totals about 30k in total income for us this past year.

Answer 1

If you had $177k in short-term capital gains that number is probably correct, or at least in the ballpark. But you said that the info from your broker is "gains/losses". Which is it? Any losses you experienced will offset any gains so the net amount is what you want to worry about.

If you truly had $177k in net short-term gains then you shouldn't have any problem paying the tax man since you have the money or can liquidate enough shares to pay up. If you squandered the gain get ready for a ROUGH ride. Bankruptcy will NOT clear any tax debt so that's not an option. If you're truly in that situation you need the advice of a tax professional -- a CPA or tax attorney, NOT one of the storefront tax prep mills like Block or Hewitt.

How is it that your military pay is only $16k? That's E-2 or E-3 wages. Not many GIs at that pay grade have dependents old enough to earn even $4k a year.