when do you pay taxes on stocks?

Question

if i start to invest soon, i plan on investing in the marker and when ever i sell a stock and make money, i plan on putting the money back in to the market.

Answer 1

You figure out your short-term and long-term losses after the year is over (although it is wise to keep track during the year to see where you stand), and are taxed if there is a net gain. If there is a net loss, you are limited to deducting capital losses up to $3,000 per year ($1,500 if married filing separately). The excess you can carry forward and use $3,000 per year until used up, or you can offset any gains in future years by the loss carryforwards and use up to the $3,000 loss limit above and beyond the gains until your losses are used up. There are a few things to watch out for though, the big one is what is called a "wash sale"; that is where you have owned a stock that has gone down in value and you sell it and buy it back, but before 30 days have gone by. The IRS says if you don't wait 30 days to buy a stock back that you have sold at a loss, then the loss is disallowed. They have no problem with you selling a stock at a gain and buying it back in less than 30 days though. Also, if you hold onto a stock for less than 1 year before you sell it, the gain is short term gain rather than long term gain, and is taxed at your tax bracket, instead of a lower rate with long-term gains. Inherited stocks are always considered to be long-term gains when you sell them at a profit. Also, you need to consider the effects of state taxes on capital gains, Massachusetts for example taxes long-term capital gains at the normal tax rate (5.3%) but taxes short-term capital gains at 12%.

Answer 2

If you do much trading this will drive you nuts when you file.

This is filed on a Schedule D and all the attachments it takes to list EVERY stock trade... You have to show WHEN you bought the stock and WHEN you sold the stock. You have to show WHAT you paid for it and you have to show WHAT you earned on it if it's a profit. You also have to show if it was a "wash" sale because that is handled differently as is any long term capital gains or losses.

You will need to either set up a data base on your trading computer, just to handle the stock trades or you will need to be sure the brokerage firm that you are trading through (online trades are still handled by a broker) will furnish that information at tax time.

Scott Trades is very good and they will send you all the information you will need to fill in Schedule D.

If you do much trading, you can easily have 15 to 20 pages of trades listed on the schedule D.

I was an online daytrader for 3 years and made some good money at it, but that was the hardest work I have ever done and filing my taxes was a nightmare.

Answer 3

You pay tax on each sale in the year you sell the stock. It doesn't matter what you do with the money - buying other stock with the proceeds doesn't change the fact that you must pay tax on the other sale.

Answer 4

Dividends have to be listed as income in the year they are received. You pay taxes on the capital gains from selling stock in the year that you sell it. You can deduct broker fees from your profit.

Answer 5

You pay tax on the gains from a sale in the year of the sale.
You pay tax on the dividends paid by a stock in the year the dividends were paid.

Answer 6

Most of the time when you take the money out - your gain. I don't think they would tax you on your gains if you left it in there then the next year you lose it all.

Answer 7

The dividends would be suggested to you each and each twelve months. You contain them on your earnings for that twelve months in spite of what you do with them. in case you reinvest them, they adjust into the value for the hot shares you merely offered. once you sell the inventory, in case you sell it without warning, your value is the unique volume paid, which contain commissions, and the reinvested dividends. You subtract that from the internet volume of the sale (or you contain the value of the sale in the value of the inventory, and subtract from the gross volume of the sale - the respond is an identical the two way). the end results of the subtraction is your capital benefit (or loss) on the sale, which provides to or subtracts out of your earnings for the twelve months of the sale. you will fill out a time table D for that twelve months.