Pay taxes on stocks!?

Question

How do i pay taxes on profit i made on stocks? and how do i do it like if i just use the money i made to buy another stock !?? and sometimes i take the profit out!? and spend it? what do i pay taxes on and how do i?

Answer 1

Glad you asked. This all depends on how you own your stocks. If they are in a retirement savings vehicle you don't owe taxes on that money until you take it out and use it.

Otherwise:

1. Dividends on stock are taxed at 15% and sometimes at 5% for low income individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003.

2. If you sell a stock for more money than you paid for it you will owe capital gains tax on it, which is 15%. Although, if you held the asset for less than a year, you will owe ordinary income tax on it which can be as high as 35%. Capital gains tax on items such as small business stock, real estate and collectables will vary as these are special circumstances.

Generally when you sell a stock through a brokerage they will send documentation of that income to the IRS and provide you with copies of these documents before January 31 in the year following the transaction. It is then your responsibly to include this income in your federal income tax return and pay taxes on it. You may also be required to pay estimated taxes on the income as you earn it throughout the year.

Answer 2

It doesn't matter what you do with the money you get from the sale. You pay taxes on any gain whether you take the money out, use it to buy another stock, or light a match to it. Unless it's in a tax-sheltered vehicle like an IRA, you pay tax for the year of the sale.

You fill out a schedule D with your tax return, showing all of your stock sales for the year. If your net gain is long-term, which means that you had a stock for at least a year and a day, then there are special rates, 5% or 15%, for tax on the gain - schedule D will walk you through the calculation of the tax. If the gain is short term (held it for exactly a year or less) then it's taxed at whatever your bracket is.

Answer 3

You report the sales of stocks during the calendar year on Schedule D of your 1040 return. If you sell the stock for more than you bought it for you have capital gains. If you sell it for less than you bought it for then you have capital losses. You can net capital losses against capital gains. If you have net capital gains you are taxed on them. If you have net capital losses you can deduct up to $3,000 ($1,500 if married filing separately) per year against other income, any excess is carried forward to use in future years. Short-term gains (held less than 1 year before selling) are taxed at your regular tax rate. Long-term gains (held 1 year or more before selling) are taxed at maximum of 15% (5% if you are in 10% or 15% tax bracket). Inherited securities are automatically long-term no matter what the holding period is. If you sell one stock and buy another, you still have to pay taxes on the stock you sold. Taxes are paid on the net gain, not on what you sold the stock for.

Answer 4

When you file your tax return, you report all capital gains on Schedule D.

You will need to list every sell transaction. Therefore, you will need to decide the cost basis basis of all of your transactions (FIFO, LIFO, Weighted Average).

If you are reinvesting the profits in other investments, then any additional tax will have to come out of your regular earnings or you will need to sell some investments to pay the taxes.

Read the link below for beginning information on how to report all of your transactions. There are additional links that you will need to read as well.

Answer 5

talk to a tax professional who deals with individuals who invest. too many tax laws to speculate on a site as this.

Answer 6

Class A or Class B shares? You need to be specific along with your level of income.