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Author: ivydoc Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121189  
Subject: Tax Brackets Date: 2/3/1999 1:16 AM
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I'm a student who bought some Dell last March and am looking to sell before they announce earnings Feb 16th.
It will be my only source of income for the year (about $4000 profit). I was wondering whether or not I will have to pay taxes on it since in the state of Massachuestts if you make less than $8000/year you don't pay income taxes. (is stock proftis considered in the same catagory as work-income?) If I do have to pay taxes, what rate will I have to pay and would it be less if I held the stock for a full year? (thats what i hear) Basically I'd like to know so that I can weight the benefits for selling before 2/16 (since dell usually tanks a bit after earnings annoucements no matter how good) or holding till March for a lower tax rate.
Thanks for you help!
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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: 9544 of 121189
Subject: Re: Tax Brackets Date: 2/5/1999 12:00 PM
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[[I'm a student who bought some Dell last March and am looking to sell before
they announce earnings Feb 16th.
It will be my only source of income for the year (about $4000 profit). I was
wondering whether or not I will have to pay taxes on it since in the state of
Massachuestts if you make less than $8000/year you don't pay income taxes. (is
stock proftis considered in the same catagory as work-income?) ]]

Sorry, but I can't give you any help with your MASS tax issue. We focus on federal issues here.

What I can tell you is that you will be required to file in order to report your stock sale if the gross proceeds from the sale are greater than $6,950 (assuming that you are single, are not blind, are claiming yourself as your own dependent, yada, yada, yada). But if this is all true, you would find that you would have no federal taxes to pay because your taxable income would be below the limitation. But it is very likely that filing will be required, even if no tax is due. Read the federal instructions on "who must file" in the Form 1040 package for additional information.

[[If I do have to
pay taxes, what rate will I have to pay and would it be less if I held the stock for
a full year? (thats what i hear) Basically I'd like to know so that I can weight the
benefits for selling before 2/16 (since dell usually tanks a bit after earnings
annoucements no matter how good) or holding till March for a lower tax rate. ]]

Again, read the instructions in the Form 1040. If this is your only income, it is likely that it will not be subject to tax. But the instructions to Form 1040 will lay that out.

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