Stock trading and tax question?

Question

I recently started trading stocks. I started buying and selling stocks using stocktrade almost every other day. Is there anything I need to know regarding taxes (Is there a limit on how long should i keep the shares etc). I am new to all this.

Answer 1

Without knowing what you already know, it's hard to know what to tell you. What I will do is give you a link to great site for explaining the tax implications of trading stocks.

http://www.fairmark.com/capgain/

You can choose how much of the material you want to read, but I suggest you be sure to read the section on "wash sale" rules given the way you described your trading.

Answer 2

Paying taxes is good. it means you're making money. many people have turned a short term gain into a long term loss by waiting until the long term rate was in effect and missed an opportunity. Don't let the tail wag the dog.

Remember to file quarterly estimated payments on Federal 1040-ES and whatever your state uses. If you wait until the end of the year, you might get stuck with penalties and interest.

Answer 3

Basic concept is:
If you hold the stocks less than a year, you pay tax like you recieve a pay check (Usually around 20%-30%). If you hold a stock more than a year the tax rate will be lesser (Around 15%). Scottarde will send you a year end statement which you furnish in your tax returns while filing. Bottomline, You need to pay the capital gain tax short or long.

Answer 4

Tax bracket Short-term rate Long-term rate
10% 10% 5%
15% 15% 5%
25% 25% 15%
28% 28% 15%
33% 33% 15%
35% 35% 15%

It depends on your tax bracket. You are subject to short term capital gains. If you held for a year or long it would be a long term capital gain.

Answer 5

not sure you are reading it right, the 1099 B shows 'proceeds' from the sale of your stock, it only shows what monies were received into your account in the sale, it does not show you the price you paid for it or when you bought it, especially if you purchased in previous years, that is something you have to keep track of yourself, and the difference from what you paid for it and what it sold for is your actual gain or loss short term(under a year) is ordinary tax rates, ordinary income, long term would have been 15% until the end of this year