How does capital gains work in the stock market?

Question

Do you get tax every time your portfolio rises or do you only get taxed when you withdraw money from your portfolio? What if you did not make a profit from your original investment but choose to withdraw funds from your portfolio, do you still get taxed?

Yes. I understand that, but what if you made a trade and made a profit in your portfolio but dont take out the money and save it for another trade, do u get taxed while the money is portfolio or only when you withdraw it

I'm in the U.S. and in NY

Answer 1

You do not get taxed when your money rises in your porfolio. You do get taxed when you sell a stock at a profit. It doesnt matter if you leave the profit in the account, you still get taxed for it. If you have a loss from another transaction they may offset each other.

Answer 2

Only when you actually sell something...

If you buy 100 shares at $10 and sell 100 shares at $5 - you actually incur a loss and no tax is due.

If you buy 100 shares at $10 and sell 100 shares at $15 - you made a profit of $5 per share ($5 x 100 shares) and so you owe tax on that.

What you do with that profit is up to you - but you still owe a tax on that particular sale.

For example...if you bought 100 shares at $10, then sold them for $15, you'd make a profit that you will need to pay a capital gains tax on...if you took that money and bought 100 shares of something else at $15, and then sold them for $10, you'd now have a loss. 2 sales...one of them is a capital gain.

***EDITED TO ADD****
Every time you SELL, the IRS wants their cut.
At the end of the year, your broker will send you (and the IRS) a list of all the SELLS you had for the year...you will need to take that list and fill out a SCHEDULE D as part of your tax returns.

The IRS doesn't care what you do with your money - leave it in the portfolio, buy more stocks or cash it out and buy a house - they only care about every SELL.

Answer 3

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Answer 4

You only pay tax on capital gains when you sell a stock and make a profit. Even if the money is left in your account with the broker you pay tax on the gain from the sale.

If you sell a stock at a loss then you can deduct it from other taxable income on your tax return.

Answer 5

If I understand what you are asking correctly, the answer is that there is no tax payment at the time you sell or at the time you withdraw money.

If you have large enough gains you are required to make a quarterly estimated tax payment. That is your responsibility; the brokerage will not do it for you. You can find what you need to know about estimated taxes at

http://fairmark.com/estimate/index.htm

Answer 6

Capital gains are the profits you make on your investments. Your accountant figures it all out at tax time.

Answer 7

Which country? Tax laws differ from one to another, so it matters.

Answer 8

taxed only when you take money out---known as "capital gains" tax. no profit---no tax.