Fill me in on taxes and stocks

Aug 16, 2001
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Yes, Yet another stock thread! :D

How much tax is there on profits made in stocks? I imagine it gets complicated when doing short term deals.
Anyone here with experience of this?
 

Sluggo

Lifer
Jun 12, 2000
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Capital gains taxes used to be about 28% but might have dropped a point or two in the last few years, I quit worrying about it after I got an acountant to do my taxes.

Capital gains taxes not only apply to the stock market, but to any profits on investments. Your primary residence is the only exclusion to this and there are a few rules concerning that.

IIRC you can deduct losses is the stock market, but it is capped at about $3000.
 

SludgeFactory

Platinum Member
Sep 14, 2001
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If you hold the stock for less than a year, the profits are taxed at your ordinary income tax rate. If you hold the stock for more than one year, then you're taxed at the capital gains rate, which is 20% (or less if you're in the lowest tax bracket).

 
Aug 16, 2001
22,505
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So basically if I trade with stocks and hold them for less than a year..... doing my taxes will be a major PITA.
Somehow I need to keep track of what and when I sell/buy.
Ouch!
 

Sluggo

Lifer
Jun 12, 2000
15,488
5
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Originally posted by: FrustratedUser
So basically if I trade with stocks and hold them for less than a year..... doing my taxes will be a major PITA.
Somehow I need to keep track of what and when I sell/buy.
Ouch!

Doing taxes is always a PITA, whether you trade stocks or not.
If you do any trading, your broker should be able to give you a summary of your years trading activity at the end of the year, with all buy/sell prices, and your net profit/loss after fees and expenses.

 

Miramonti

Lifer
Aug 26, 2000
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Originally posted by: Sluggo
Capital gains taxes used to be about 28% but might have dropped a point or two in the last few years, I quit worrying about it after I got an acountant to do my taxes. Capital gains taxes not only apply to the stock market, but to any profits on investments. Your primary residence is the only exclusion to this and there are a few rules concerning that. IIRC you can deduct losses is the stock market, but it is capped at about $3000.

For an investor, can losing stock losses be matched directly against profitable positions that capital gains taxes are required on, for a potential 0 sum profit/tax liability, or do they have to be treated as individual entities with the loss writeoff capped at 3k a year, while the total gains get taxed at the full rate?