Tax Question

[pravi333]

I do know each year there will be a tax thread and questions get answered in that. But i need an answer quickly in order to make some sale on stocks to shield my meagre profit i made this year :shocked:

I am new to investing in stocks, only this year i started it.

Here goes my accounts,

I made a profit of $2000 in selling some stocks
Inquired a loss of $1000 in selling stocks

Interest from savings account $300


Federal Income tax paid for this year $10,000


I still own some stocks which i bought it for $10,000 & now its worth $5,000


Come tax time,

Tax on Capital gains = (2000-1000+300) x 0.3 (i am taking a 30% federal income tax) = $1300 x 0.3 = $390


Can i sell some or all of the stocks i currently own to shield the tax on the $1300 and also is it possible to get a refund on the already paid $10,000 federal income tax?

Lets say i sell all the stocks & incur a (10,000-5,000) $5000 loss, will i get a tax relief for the same amount?

Total Federal Income tax = 10,000 + 390 - 5000 = $5390

Am i right in my calculations?
I do understand whatever stocks i sell for tax right off's i cant buy those back for the next 30 days, right?
Any other information i need to know?

P.S: all numbers are imaginary.

 

[pravi333]

lol what are the odds? theres another thread started today like this!! not sure if that answers my question!

 

[Ns1]

wat?

sell 2k more of your stock

2k profit - 1k loss -1k loss = 0 gain

Yes you can rebuy it before 30 days but if you do you can't claim a loss

No you can't do anything about the income tax you already paid until next year, EXCEPT not pay anymore taxes this year

 

[Crusty]

I think it's time to bring up the stickied TAX thread already :Q

 

[Genx87]

At 10K I doubt you pay much of anything in income tax. On the federal side you should have an effective 0%. State tax might be there.

 

[pravi333]

Originally posted by: Ns1
wat?

sell 2k more of your stock

2k profit - 1k loss -1k loss = 0 gain

Yes you can rebuy it before 30 days but if you do you can't claim a loss

No you can't do anything about the income tax you already paid until next year, EXCEPT not pay anymore taxes this year

so i cant sell enough stocks & incur enough loss to get a refund on the 10k i already paid?
of course this is all i am talking when i file for tax next year

 

[pravi333]

Originally posted by: Genx87
At 10K I doubt you pay much of anything in income tax. On the federal side you should have an effective 0%. State tax might be there.

10k is the total amount taken out of my pay check so far towards federal tax.

 

[Ns1]

Originally posted by: pravi333

Originally posted by: Ns1
wat?

sell 2k more of your stock

2k profit - 1k loss -1k loss = 0 gain

Yes you can rebuy it before 30 days but if you do you can't claim a loss

No you can't do anything about the income tax you already paid until next year, EXCEPT not pay anymore taxes this year

so i cant sell enough stocks & incur enough loss to get a refund on the 10k i already paid?
of course this is all i am talking when i file for tax next year

Oh

2k profit -1k loss -1k loss = 0 gain

Sell 6k more stock (your base price) to get another -3k loss to max out your 3k capital gains loss (I'm assuming you already owned all these stocks for > 1 year)

3k loss x 30% bracket = 900 tax benefit

In the end, you sold 8k stock and have 2k left. You take on 4k in losses, in addition to your 1k in previous losses, and offset your 2k gain, for a net of 3k capital gains loss

 

[pravi333]

Originally posted by: Ns1
Oh

2k profit -1k loss -1k loss = 0 gain

Sell 6k more stock (your base price) to get another -3k loss to max out your 3k capital gains loss (I'm assuming you already owned all these stocks for > 1 year)

3k loss x 30% bracket = 900 tax benefit

In the end, you sold 8k stock and have 2k left. You take on 4k in losses, in addition to your 1k in previous losses, and offset your 2k gain, for a net of 3k capital gains loss

I have only owned them for less than 3 months now, is that greater than 1 year is needed?

I only get 900 tax benefit for a 3k loss? I was planning to go long on these stocks and i am willing to sell them for tax purposes if i can get a 100% tax benefit. So it wont make any sense for me to incur that 3k loss for $900 if i think those stocks are going to go above in value.

 

[BoomerD]

http://www.irs.gov/taxtopics/tc409.html



http://www.irs.gov/pub/irs-pdf/f1040sab.pdf

http://www.irs.gov/pub/irs-pdf/i1040sa.pdf

 

[Ns1]

Originally posted by: pravi333

Originally posted by: Ns1
Oh

2k profit -1k loss -1k loss = 0 gain

Sell 6k more stock (your base price) to get another -3k loss to max out your 3k capital gains loss (I'm assuming you already owned all these stocks for > 1 year)

3k loss x 30% bracket = 900 tax benefit

In the end, you sold 8k stock and have 2k left. You take on 4k in losses, in addition to your 1k in previous losses, and offset your 2k gain, for a net of 3k capital gains loss

I have only owned them for less than 3 months now, is that greater than 1 year is needed?

I only get 900 tax benefit for a 3k loss? I was planning to go long on these stocks and i am willing to sell them for tax purposes if i can get a 100% tax benefit. So it wont make any sense for me to incur that 3k loss for $900 if i think those stocks are going to go above in value.

Well you get taxed differently depending on how long you hold it for. I guess it doesn't matter in this case (sorry typing in between work)

Net benefit means actual cash benefit to you. Every dollar you write off =

($ write off)*(tax bracket) = tax benefit (more or less)

I'm not sure I get you when you say 100% tax benefit. It's not like the government is going to give you 3000 dollars (ie a tax credit) because you lost it in the stock market. It's a loss which offsets your taxable income.

Breakin out the math with imaginary numbers, pardon all the rounding...

Let's say 30% tax, 10k in withholdings, 50k income

50k * 30% = 15k bill - 10k withholding = 5k tax due
50k - 3k capital loss = 47k taxable income * 30% = 14100 bill - 10k withholding = 4100 tax due

 

[pravi333]

Originally posted by: BoomerD
http://www.irs.gov/taxtopics/tc409.html



http://www.irs.gov/pub/irs-pdf/f1040sab.pdf

http://www.irs.gov/pub/irs-pdf/i1040sa.pdf

Thanks, the wordings are so confusing and sometime open to predictions, that why i was'nt sure and posted something specific to me.

I should probably find a online tax calculator & fiddle with the numbers there to get a more clear picture.

 

[pravi333]

Originally posted by: Ns1

Well you get taxed differently depending on how long you hold it for. I guess it doesn't matter in this case (sorry typing in between work)

Net benefit means actual cash benefit to you. Every dollar you write off =

($ write off)*(tax bracket) = tax benefit (more or less)

I'm not sure I get you when you say 100% tax benefit. It's not like the government is going to give you 3000 dollars (ie a tax credit) because you lost it in the stock market. It's a loss which offsets your taxable income.

Breakin out the math with imaginary numbers, pardon all the rounding...

Let's say 30% tax, 10k in withholdings, 50k income

50k * 30% = 15k bill - 10k withholding = 5k tax due
50k - 3k capital loss = 47k taxable income * 30% = 14100 bill - 10k withholding = 4100 tax due

that makes so much sense to me!!! thank you very much!!

 

[pravi333]

Originally posted by: pravi333

Originally posted by: Ns1

Well you get taxed differently depending on how long you hold it for. I guess it doesn't matter in this case (sorry typing in between work)

Net benefit means actual cash benefit to you. Every dollar you write off =

($ write off)*(tax bracket) = tax benefit (more or less)

I'm not sure I get you when you say 100% tax benefit. It's not like the government is going to give you 3000 dollars (ie a tax credit) because you lost it in the stock market. It's a loss which offsets your taxable income.

Breakin out the math with imaginary numbers, pardon all the rounding...

Let's say 30% tax, 10k in withholdings, 50k income

50k * 30% = 15k bill - 10k withholding = 5k tax due
50k - 3k capital loss = 47k taxable income * 30% = 14100 bill - 10k withholding = 4100 tax due

that makes so much sense to me!!! thank you very much!!

"I'm not sure I get you when you say 100% tax benefit. It's not like the government is going to give you 3000 dollars (ie a tax credit) because you lost it in the stock market."

^^^ thats what i thought! & i got it all figured out to shield my profit & make some more profit, guess uncle sam is smarter than me!