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Author: mathetes Big red star, 1000 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Re: Tax Forms Date: 1/13/1999 12:43 PM
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I am currently a college freshman who has begun trading online. Since this is the first time I have traded I am quite confused about how investment taxes apply to me.

Hi, Boomshaka

Even though you're a college freshman, you must have filed IRS tax returns before, just to account for summer or part-time jobs and be able to get a refund. Accounting for your profits or losses from trading isn't a lot more complicated. It goes on Schedule D of the 1040 Form. You can get a copy of the form and some instructions for it from the IRS site below.

http://www.irs.ustreas.gov/forms_pubs/forms.html

The main thing you should be doing is keeping records of the purchases and sales, dates, prices, numbers of shares, etc. Your on-line broker probably has a summary statement that you can get directly on-line (I know mine does), so that's not a big deal either. The broker will report to the government your bottom line earnings/losses, in much the same way that an employer reports summary figures. Your numbers will be expected to agree with theirs (of which you'll also be sent a copy).

The first time I bought a house the prospect was pretty daunting. Then I told myself that a lot of other people in this world seem to have survived; it couldn't be all that difficult. You'll find that filling out tax forms for these transactions is mostly tedious, not complex.

mathetes
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