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Author: LUTZD Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121169  
Subject: STOCK TAX Date: 11/19/1999 4:46 PM
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I am a pure rookie at this, so here it goes...If I'm trading online, when do the tax considerations come into play, at the end of the year? Assuming I'm not in a IRA or pension plan. I feel like a fool for asking......
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Author: hghcpa Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21397 of 121169
Subject: Re: STOCK TAX Date: 11/19/1999 5:04 PM
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I am a pure rookie at this, so here it goes...If I'm trading online, when do the tax considerations come into play, at the end of the year? Assuming I'm not in a IRA or pension plan. I feel like a fool for asking......
=========

I live by the rule that in reality there is truly no such thing as a dumb question - so dont be scared to ask - it is the only way you learn.


The gains and losses from your stock transactions will be reported to you by your broker. You are responsible for reporting those on your tax return and paying any applicable taxes with the return. If you are successful at your trading and you make gobs of money then you may be wise to investigate paying your taxes quarterly in the form of "estimated tax payment" on form 1040-es. Doing so may keep you from paying a penalty on your tax return.

Try the FAQ for more detailed answer on the rules regarding estimated taxes.

Pete

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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21404 of 121169
Subject: Re: STOCK TAX Date: 11/19/1999 6:51 PM
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<< The gains and losses from your stock transactions will be reported to you by your broker. >>

Since the original poster is a real rookie, I'll offer an amplification. There is tax consequence only when you sell. IOW, paper gains and losses are not recognized, for tax purposes, until you dispose of the security.

Dividends are another matter. Dividends are taxable income to you in the year paid, even if you reinvest them.

IRS Publication 550 has a good discussion of the various tax issues on stocks, and Publication 564 discusses mutual funds. Both are available at http://www.irs.gov

Phil Marti
Tax Preparer

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21465 of 121169
Subject: Re: STOCK TAX Date: 11/20/1999 4:02 PM
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<<I am a pure rookie at this, so here it goes...If I'm trading online, when do the tax considerations come into play, at the end of the year? Assuming I'm not in a IRA or pension plan. I feel like a fool for asking......>>

Yo!!! Rookie!!!

Welcome to the folder.

You'll get hit with taxes when you realize gains or losses. And you "realize" a gain or loss when you have a completed transaction. And you have a completed transaction when you make both a purchase AND a sale.

So you'll pay no taxes on "paper" profits. But Uncle Sammy will want his hand out when you buy and sell for a profit.

Since you are new to taxes and investing, check out the Taxes FAQ area. There are a number of issues discussed there...including this very one. And if you are really serious about taxes and investing, check out my new book. There is a BUNCH of information there that will help you through the tax and investment maze.

TMF Taxes
Roy

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Author: MrJones One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21467 of 121169
Subject: Re: STOCK TAX Date: 11/20/1999 7:12 PM
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I have the same problem - I'm about to sell a big chunk of stock, profits equal to about 60% of my yearly gross income. I was able to get an estimate of Federal Taxes from the quicken.com site, but cannot seem to locate a simple description of how to calculate the taxes for the state of CA. Can anyone here help me figure this out? I know CA wants their money - I just can't figure out how much!

Thanks,
MrJones

ps: please copy replies to my email. Thanks.

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21569 of 121169
Subject: Re: STOCK TAX Date: 11/23/1999 9:12 AM
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<<I have the same problem - I'm about to sell a big chunk of stock, profits equal to about 60% of my yearly gross income. I was able to get an estimate of Federal Taxes from the quicken.com site, but cannot seem to locate a simple description of how to calculate the taxes for the state of CA. Can anyone here help me figure this out? I know CA wants their money - I just can't figure out how much!>>

They'll want it ALL!!

But seriously...CA doesn't recognize any preferred rate on long term capital gains. They'll treat the gain as ordinary income, and you'll pay taxes on that income at your marginal CA tax rate.

TMF Taxes
Roy

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