lol when i sell no taxes are taken off from me but i think thats just cause its a custodian account and my dad pays :)
If you hold a stock for less than one year, and do not have it set up in a tax deferred account ( Like a 401K) any money you make off of stocks is considered to be "taxable" income.. Meaning you will have to pay taxes on capital gains..
Yeah that's definitely taxed as a gain. If you hold for a year or longer the tax is less.
......so is the "taxable gains" tax at the same rate as my income tax. If I hold less than a year do I have to pay a penalty tax? Are these taxes going to be unbearable and eat up all my gains? The account I open will be for trading. I want it to grow, as I am trying to build wealth, but I want to be able to pull money out here and there, if I need to, (if I make really good gains) for things I may need in the future. Therefore, this will be just a regular account and not a 401k or any other tax deferred program. I will have another account open for 401k and retirement, though.
Short term gains are defined as stocks held less than one year. Long term gains are defined as stocks held for more than one year. Short term gains are taxed as ordinary income so whatever tax rate your in applies.
THANKS FOR THE INFO. ASOKOL, THAT SHOULD HELP.
Taxes are definitely a part of the strategy. Keep in mind all losses offset the gains so you only pay on your net gain. if you lose money at least you get money off taxes.
....so basically you total up your gains and losses at the year end and pay taxes on the total net gains on all of the stocks you traded for the entire year.
Yepper and there's even some websites that will do it for a small fee. You just export your trades from your brokerage account and import them into the tax website. It spits out the forms you need for Uncle Sam. So you only pay taxes on money you made trading, so paying taxes ain't necessarily that big of a thing. And if you pay them every year, you won't get hit all at once like you would in a deffered account.