Taxes on Stocks Explained for Beginners that Know NOTHING About Taxes

I'm gonna explain to you taxes on stocks from a very basic overview as if you knew nothing and I'm gonna speak to you as if you are clients in my office I will be making other intermediate level videos in advance level videos about taxes on stocks however this is an entry level video since we have a whole series on investing in the stock market for beginners I thought this would be an appropriate time to release this video about taxes on stocks from a very entry-level very basic level overview if you didn't know my name is Brian Kim I'm a certified public accountants and owner of multiple tax practices I'm helping you get started in the stock market and again this is why I'm making this video about taxes on stocks for beginners let's begin I'm gonna go over frequently asked questions that my clients ask me here we go taxes on stocks question 1 will I pay taxes on stocks if I don't sell my stock the answer is no if you don't sell your stock and the value increases that's called an unrealized gain that's supposed to if you do sell the stock that would be a realized gain you're only gonna have tax consequences when you have a realized gain in other words once you actually close the position so you bought the stock and then you sold the stock for a game then you realized the game which is why they call it I realize game you're only gonna have tax consequences and pay taxes on realized gains so if you just bought the stock and you hold it and it increases in value when the year ends you're not gonna pay taxes on that it's just gonna be an unrealized gain gains that you have not realized yet that's a good question that's a frequently asked question but the answer is no taxes on stocks question number two will I pay taxes on stocks if I sold my stock for a gain but I left it in the brokerage accounts the answer is yes if you sold the stock for a game and you just left the money in your brokerage account in other words you did not withdraw that money from your brokerage account back to your bank account even though you didn't withdraw the money from your brokerage account back to your bank account you're still gonna pay taxes on the realized game because again it's about when you closed your position it's about when you realize the gain not about the money movements not about the money flow from the brokerage account back to your bank account so the answer is this is kind of intertwined with question number one you're gonna pay taxes when you have a realized gain and what you do with the money afterwards that's up to you that's not gonna affect the tax situation so if you sold it for a game you realize the game and the money's still sitting in your brokerage account you're still gonna pay taxes on it you're still going to be subject to tax taxes on stocks question number three how much in taxes will I pay on my stock gains this is this could be a very complex this could be a very complex answer it depends on your situation but again this is a very entry level of basic level video in a nutshell how much you will pay taxes on your stock gains it's gonna greatly depend on how long you hold that stock if you buy the stock and then you sell the stock for a game on within a year so under a year's worth of time then you will be subject to short-term capital gains which is going to be your regular tax rates so if you buy the stock and then you sell the stock a year later or after a year you will be subject to long term capital gains long term capital gains are much favorable rates therefore you're gonna get better tax treatments if you have long-term capital gains and again it just depends on how long you hold the stock so if you if you buy and sell under a year you're gonna get subject you're gonna pay taxes and a normal rates if you hold it for a year or more and then you sell it and then you get a game you have a game you're gonna pay better tax rate that better tax rates because you're gonna be subject to long term capital gains that's a very abbreviated or simplified version there's also a thing called the zero percent long term capital gains rates that's for another video I actually did cover that in another video about long term capital gains but it really depends primarily on your holding period that's gonna dictate your tax rates that you will be paying on your gains taxes on stocks question number four what happens if I sold my stock for a loss if you sold your stock for a loss that's unfortunate however for tax purposes losses are good so you do not want to ignore your stock losses because your stock losses are deductions deductions are good because that reduces your taxable income therefore don't forget about your stock losses your stock losses will offset any other stock gains or investment gains known as capital gains therefore your stock losses are important and don't don't neglect them again this is an entry level video so we're not going to go into the mechanics behind how much you can deduct in all the scenarios about tax loss harvesting I have another I would say intermediate level video based on stock losses capital losses and stock loss harvesting so please check that out as well but basically if you do have stock losses you can use them to your because they will be deductions so please keep that in mind taxes on stocks question number five this is our last question how do I reflect all this buying and selling of stocks on my tax return within your brokerage account you're gonna be buying stocks selling stocks buying selling buying selling making money on this trade losing money on that trade and so on and so forth all this information will be given to you on a tax form called the 1099 B as in boy so 1099 B this tax form will be provided to you by February 15th after the year closes out you're going to take this tax form ten and nine B and then you're gonna either plug it into your software your TurboTax or your at-home software it's going to be very straightforward it's like plugging in the information off of any other tax form or many at-home softwares they offer you the auto where you look auto log-in and then the auto import options where you can download this tenant and be data directly from the brokerage account and another option is if you have an accountant you just provide your accountants the 1099 B tax form all that all the information about all your investments that's gonna be summarized for you including the interest including the dividends including capital gains and it's going to be showing you short-term capital gains long-term Japanese all the details of your brokerage connectivity will be summarized for you as 1099 B you just need to remember that remember that you have it and there make sure you include this information on your tax return I will make more videos about short-term capital gains long-term capital gains and very advanced topics such as NQ SOS is OCS PPS ops and advanced investment partnership key ones as well and please subscribe and check out our investing a stock market for beginners videos if you do want to get started in the stock market you can use our affiliate link in the description below and you would get a signup bonus free money is always good thank you so much please subscribe and take care

Channel: ClearValue Tax

Views: 994,600

Keywords: taxes on stocks, Taxes on stocks, taxes, stock taxes, short term capital gains, long term capital gains, stock market taxes, stocks taxes, stocks tax, stock tax, investing advice beginners, investing tips beginners, investing tips stock market, investing tips, stock market for beginners, stock market, stocks, WeBull, Robinhood, investing in stocks for beginners, how to invest in stocks, how to invest in the stock market, investing mistakes, investing, stock, investing 101, tax, IRS

Id: EKYMbsjUUtE

Length: 9min 2sec (542 seconds)

Published: Wed Jun 03 2020