How Do Taxes Work On Stocks?
Q: Anyone, this is my first time buying stock with an individual brokerage account (via SogoTrade), and I'm just wondering how profits on taxes work. Say if I cash out all my shares of SIRI and make $2,000, do I get a check for $2,000 and I personally will have to pay taxes on that money on my tax return next year, or will taxes be taken out of the profits by SogoTrade for me and sent to the IRS in my name? I would guess that I'll be responsible for the taxes but I'm not sure. Sorry if this sounds like a dumb question, but I'm just getting into the stock market and not really sure how profits are taxed. Thanks everyone!
A: You will get a $2000 check. If held less than a year, you will pay short term gains. Greater than a year long term gains. http://www.irs.gov/pub/irs-pdf/f1040sd.pdf A more specific answer is when you are doing your tax return they will ask you three questions regarding your stocks. When did you buy it? When did you sell it? How much did you gain/lose? Based on those three answers they will either tax you or credit you. Thanks guys, thats EXACTLY what I needed to know. I'm not planning on selling my shares of SIRI any time soon as I think this stock will ultimately climb WAY higher. LONG SIRIUS !!! Welcome to the wonderful world of reporting stock investments. You will now get to experience the fun and excitement of schedule D and the 1040 (if you have been filing something else). Your tax basis will be determined by the purchase date and price and the sell date and price.
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