Paying Taxes on Stocks Income

Filed in archive Quick introduction on March 3, 2010

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People are worried about paying taxes all the time and the same applies to stock investment also. In case of stock market you only need to pay tax when you sell a stock and make profit or loss. If you sell a stock a year after buying it you are eligible to pay tax at a rate of 15% and this tax is termed as Long Term Capital Gains Tax. This only needs to be paid if the income percentage exceeds 15%.

In case you have lost money on the bourses, the loss is counted against your taxable income up to $3,000 for individuals and $1,500 for people filing separately from their spouse. In case the loss is above $3,000, the remainder can be deducted from a future year.

A number of people put to use this strategy for reducing their taxable income during the year when they earn unusual profits. A losing stock is sold for realizing the loss and then is brought back with anticipation to realize gains during another year when income is low.

A thumb rule is to put aside at least 15% of your profits to pay taxes whenever you sell a stock as this would ensure that you can enjoy your fruits without having to worry regarding any future bills from IRS.

And if all these calculations bother you then opt for tax preparation coupons to take care of all your worries.