Taxable stock or investment money

Discussion in 'The Cocktail Lounge' started by Rosyrain, Feb 6, 2015.

  1. Rosyrain

    Rosyrain Senior Investor

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    If you invest money in the stock market just to buy and sell on a regular basis, that is not a part of your retirement account, do you have to pay taxes on this money during income tax season? I was curious about this because wouldn't it just be a source of income?
     
  2. Profit5500

    Profit5500 Senior Investor

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    I think that really varies from place to place. If it is income going into the retirement account then maybe, but I do not know. You may want to ask a tax advisor.
     
  3. crimsonghost747

    crimsonghost747 Senior Investor

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    Taxes are always determined by the country/state/city which you live in. Some countries have retirement accounts or similar that are "tax protected" meaning that you will not pay any tax for profit INSIDE the account but you will pay taxes on the amount that you withdraw from the account, whenever that may be.

    If you are using a normal taxable account, then you will pay capital gains tax.
     
  4. Rosyrain

    Rosyrain Senior Investor

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    I am just curious for next year when I file my taxes because I want to do some stock market work this year. I will consult with a broker to see what kind of taxes I should have "to look forward to" and what is recommended. I am just afraid that the IRS will take a large chunk of my earnings.
     
  5. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Yes, you'll pay taxes on REALIZED capital gains, and also on dividends and interest if it's not in an IRA / Roth, 401k, SEP, or similar tax-advantaged plan.

    You'll pay the short term cap gains (ordinary income) tax rate if you realize a gain on a position you've held less than a full year. You'll pay the longterm cap gains rate if you realized a profit on a position you've held longer than a full year from the time you realized the gain.

    Dividends are generally also taxed at the ordinary income rate. Bond interest generally the same. Federally issued bonds are only taxed at the federal level, and municipal bonds are usually federally tax-exempt and also usually exempt from state taxes IF the issuer is a municipality in your own state of residence.

    You can also generally deduct up to $3k a year in realized capital losses (positions you realized losses on).

    Taxes can be pretty complicated, particularly the more money you have and the more ways you play with that money.
     

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