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Author: Boomshaka Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121159  
Subject: Tax Forms Date: 1/13/1999 3:02 AM
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Hi,
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. Also, my brokerage account is my own,
although I am still a dependent under my parents since I am a student. Does this fact affect my financial statement/forms - is tax taken on gains/losses and how much and within what time period? What forms do I
fill out for the government, or do they obtain the information from the brokerage? And when must I file for these forms, and which ones do I need?

Thanks, I REALLY appreciate your help!
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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: 8339 of 121159
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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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: 8353 of 121159
Subject: Re: Tax Forms Date: 1/13/1999 7:46 PM
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[[Hi,
I am currently a college freshman who has begun trading online.]]

Hopefully not TOO much trading...

[[ Since this is the
first time I have traded I am quite confused about how investment taxes apply to
me.]]

Then why don't you simply read my book: The Motley Fool Investment Tax Guide. It'll tell you much of what you need to know regarding taxes and investments, how the taxes apply, and how taxes work in general....not to mention tax savings tips. You can also start by check out many of my posts in the Taxes FAQ area.

[[ Also, my brokerage account is my own,
although I am still a dependent under my parents since I am a student.]]

You being a student doesn't, in and of itself, make you a dependent. If your parents provide more than half of your support (and meet the other requirements), then you are a dependent. If you provide you own support, you are not a dependent.

[[ Does this
fact affect my financial statement/forms - is tax taken on gains/losses and how
much and within what time period? ]]

The only thing that it would impact is that you would NOT be able to claim your own personal exemption if your parents claim you as a dependent.

[[What forms do I
fill out for the government, or do they obtain the information from the brokerage?
And when must I file for these forms, and which ones do I need?
Thanks, I REALLY appreciate your help!]]

Much of this is addressed in TMF Investment Tax Guide. You should really check it out.

TMF Taxes
Roy

Want to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Be the first one on your block to own this masterpiece. It'll help you with your 1998 taxes, and it's never to early to start planning for your 1999 taxes. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Pay special attention to the "archives" section. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.


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