Stupid tax questions

TheMako said: "I am all new to this so I have a really dumb question. When you sell a stock, are the taxes taken out automatically? or do I have to pay at the end of the year?"

lil dickie said: "You have to pay them at the end of the year. You will fill out an extra form and claim them on your taxes."

LanceJ said: "[QUOTE=TheMako]I am all new to this so I have a really dumb question. When you sell a stock, are the taxes taken out automatically? or do I have to pay at the end of the year?[/QUOTE] "Monday, April 15th, taxes are due. I just don't pay them. Yeah, this year Arthur Anderson did my taxes, I'm getting $6 billion back." —Conan O'Brien You pay at the end of the year, it's called Captial Gains Tax. The form you need is the Capital Gains and Losses, Schedule D (Form 1040). You have colums labeled Description, Date Aquired, Date Sold, Sales Price, Cost or other basis, and Gain or loss. So you need to keep track of these bits of information. Related Topic for Newbies There is an effect called Tax Selling (aka Tax-loss harvesting), that happens in the stock market every year toward the end of the year. Tax-loss harvesting is the selling of securities, usually at year-end, to realize portfolio losses, which an investor can use to offset capital gains and therefore lower personal tax liability. But Tax Selling doesn't just happen at the end of the year. For many of nation's mutual funds, Oct. 31 marks the end of the tax year and managers are more likely than ever to offset their capital gains by selling losers. In addition, a rule that went into effect in 2002 by the Security and Exchange Commission now requires that funds report their after-tax performance. By identifying which stocks are going to be subject to heavy Tax Selling, an investor can either short the stock, or wait until the Tax Selling is over, and buy at the bottom."

lil dickie said: "I know it's a simple concept, but it bears repeating: keep detailed records of all your trades!"

SHIFTY101EASY said: "if u keep it for more than like a year or something i heard you dont have to pay capital gains? any truth?"

lil dickie said: "[QUOTE=SHIFTY101EASY]if u keep it for more than like a year or something i heard you dont have to pay capital gains? any truth?[/QUOTE] You pay a Long Term Capital Gains tax if you hold it for more than year. That taxable rate is 15%. Otherwise, the money earned is taxable as ordinary income."

kdeck2004 said: "Question though...can you claim losses if you don't itemize your taxes? I don't own a house at the moment so itemizing my taxes would actually hurt me. I am about to start investing in some stocks, and wanted to know this before I do. Thanks!"

SHIFTY101EASY said: "what if you lose money only? can they tax you for just making the purchase?"

LanceJ said: "[QUOTE=kdeck2004]Question though...can you claim losses if you don't itemize your taxes? I don't own a house at the moment so itemizing my taxes would actually hurt me. I am about to start investing in some stocks, and wanted to know this before I do. Thanks![/QUOTE] Sure. Your losses and gains are recorded on Schedule D below like this and have nothing to do with whether you itemize or not: [CENTER][IMG]http://www.acethecset.com/d.gif[/IMG] [/CENTER] Also, I'm not a tax advisor. I highly recommend you consult a registered tax advisor rather than post tax questions in a public forum as you are very likely to get wrong or conflicting advice that may land you in lots of trouble later on down the road."

HappyHarry said: "Definitely check with your accountant. And please try to keep meticulous records. It's very hard for me to be organized and one year I made a lot of trades and really screwed up the paper work."

InvestKid101 said: "Question 1: Let's say I need to write off $12,000 stock losses and I can only write off $3000 per year. If I also made money this year let's say $8000 from the sale of stock, can I write off the $3000 + $8000 = $11000 total write off for the year, and then write off the remaining $1000 for next year? Question 2: Let's say I have a stock that I purchased for $3000 and it went belly-up $0, and it's not even beeing listed on the market, and I can't sell it, how can I take a $3000 stock loss if I can't even sell it? Question 3: I have some stock that I paid $125/share for, and now it it is at $0.0001/share. It isn't moving and it really hasn't been traded for the past 4 years. I can't seem to sell any of it, but I would like to take a stock loss on it. How can I get rid of it, or can I just call it all as a loss for the taxes? Thank you,"