No need to invest a ton of time on this suggestion, but the two main things that you need to understand are:
- You must pay taxes on your wins. Uncle Sam takes no danger and still gets paid.
- Taxes can be mitigated by how long you have held the stock for before selling it.
These taxes are known as capital gains taxes and it is the amount the government makes us cover having a fantastic investment idea and making money from it. This is just something to know about, particularly if you’re in a higher tax bracket and are investing in larger amounts of money. However, for the rest of those who are investing with a few hundred or a couple thousand dollars, unless we have some really huge wins on the current market, we likely won’t be paying too much in taxes to be overly concerned about it. Moreover, if you’ve losing investments/trades, these are netted from the winning investments/trades and you are taxed on what is left if it is a positive quantity. That’s to say, in the event that you lost more money in the market than you made you won’t pay any taxes whatsoever.
If you wish to learn the specifics of this tax discussion then search”capital gains taxes for my tax bracket” online and find out what you find.
You can dramatically reduce the number of taxes you pay if you hold the stock you have for at least a year. In actuality, as of 2015, the IRS did not need any taxes paid on what are known as long-term capital gains taxes if you’re at the 15% tax bracket or lower. These tax rates, like everything with the IRS, are subject to change every year. If they do change I am positive you’ll hear about it from your agent or see it online while researching companies.