TL;DR: When you buy or sell stocks, you must pay capital gains taxes. The amount you’ll owe is determined by the number of your earnings and how long you’ve held onto the stocks. This guide explains who qualifies, the rules that apply, and how to apply them to your situation.

When you buy or sell stocks, you must pay capital gains taxes. The amount you’ll owe is determined by the number of your earnings and how long you’ve held onto the stocks. One of the best ways to minimize your stock tax bills is to hold onto your stocks for a longer period of time.

Stock Taxes Unveiled: Understanding Their Impact on Your Tax Bill

What’s A Capital Gain?

A capital gain essentially is any profit earned when an investment is sold. An investor can calculate the capital gain earned by a sale by subtracting the asset’s original purchase price from the sale price. For example, if an investor bought $1,000 worth of stocks and sold them for $5,000, their capital gain would be $4,000.

Depending on how long the investor holds onto the stocks will result in how much tax percentage they pay. Their income is also an important factor to take note of as well. When you sell an investment for less than the initial purchase price, a capital loss occurs. Capital losses can be used to offset capital gains on tax returns.

Short-Term Capital Gain

Short-term Capital Gain is taxed as ordinary income. As a result, the amount of short-term capital gains tax paid by an investor is determined by their federal income tax bracket. Depending on the investor’s income tax bracket, the short-term capital may be taxed from anywhere from 10% to 37%.

For example, a single woman with a $75,000 annual income makes a $5,000 profit by selling stocks she bought earlier in the year. Her short-term capital gain would be taxed at the same rate as her normal income (22%). As a result, the single woman would need to owe the IRS $1,100.

Long-Term Capital Gain

Long-term capital gains are taxed less than short-term capital gains because any stock profits that are made when stocks are sold more than a year after being purchased are taxed at the rate of 0%, 15%, or 20%, depending on the investor’s tax bracket.

For example, if the woman from the earlier example kept her stock for more than a year, her $5,000 profit would be classified as a long-term capital gain. With an annual income of $75,000, the profit would be subject to 15% tax resulting in the capital gains tax bill dropping to $750.

Resolve Your Tax Bills

If you’ve found yourself in a nasty mess with the IRS, take a deep breath. Unpaid back taxes may be the biggest issue that taxpayers face, but the resolution may be very simple. For taxpayers who may have difficulty paying off an excessive amount of tax debt, there’s a relief program that consolidates many major relief programs into a one-size-fits-all assistance program; The IRS Fresh Start Program.

It’s a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!

See if You Qualify for the Fresh Start Program Today!

Resolve your tax debt before the IRS surprises you with late fees and penalties!

1. Answer a few questions
2. Qualify and be presented with a resolution – click here
3. Enroll in Fresh Start

You can click here or call us at 888-665-4416 to be connected with a verified partner of IRS Fresh Start Initiative