Tax Basics for Stock Market Investors!

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So you made some money on stocks this year congratulations well now you need to be taxed on the money you made so today i’m going to give you guys the six biggest points on taxing that every single stock market investor should know i cannot wait to share this with you guys today good day subscribers thank you so much for joining me today i am jeremy this is the

Financial education channel and today we’re talking about the basics on being taxed when you’re a stock market investor so it’s the type of things that every single beginner in the stock market should understand anybody that’s thinking about investing in the stock market then when you can plan out your investments accordingly on what you buy stock which you sell

Stocks what’s the best investments for you all those kinds of things because the tax rates are different for different things and it’s very important to understand that that way you can plan accordingly guys so we’re going to go over the six biggest things leave this video today a thumbs up if you really enjoy it so number one thing we’re talking about is dividends

And how dividends are taxed so the majority of people will be taxed on dividends at a fifteen percent tax rate a fifteen percent tax rate that’s most people know you’re super high income i believe it’s four hundred thousand dollars or more you’ll be taxed at 20% we’re regardless the dividend tax is generally going to be way less than what you’re paying as a normal

Tax person i know me personally i think i’m in the around the twenty eight percent tax bracket i’ll be in for this year so paying fifteen percent on dividends is a heck of a lot less than twenty eight percent which is what i would normally be taxed at so it’s a big advantage to being basically invested in dividend stocks and stocks that pay you dividends because

Basically you’re taxed way less than you would be if you were actually making that money yourself and things like that guys it’s another way you know the tax we talked about on the rich dad poor dad book the other day i talked about how you know if you’re you’re an investor or you’re a big business owner the tax rules really are to your advantage if you’re a small

Business owner or just an employee the tax rules are really against you this is another reason why being an investor is a great thing because you’re taxed a lot less guys that’s awesome that’s number one dividends are taxed at 15% for most people i you know income people are taxed at 20% number two if you held a stock for more than our excuse me for less than a

Year and sold it for a profit then you are going to be taxed at your normal income rate so like i said i’m the like our twenty eight percent tax bracket right so if i’m selling stock you know when i make a one dollar profit i’m going to be taxed on that stock at a twenty eight percent because it’s basically they got to go under normal income because it’s capital

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Gains held for less than a year now the difference is that goes into point number three if you held a stock for more than a year and in sold that stock you’ll be taxed at either that 15 percent or 20 percent depending on your income so i’m much less rate so you can say okay jeremy you you bought one share in a company you made a one dollar profit okay i made a

One dollar profit so if i sold that stock after i held it for only 360 days of things then i had i’m going to be taxed at my 28 percent tax bracket so i’m going to pay 28 cents and taxes but if i would have just held that stock for the state 378 so just barely more than a year i’m going to be taxed at a 15 percent extract it’s only 15 cents you say well you know

That’s not that much money well think about it on this way think about it i made a hundred thousand dollars profit that year now we’re talking big numbers because now if i held this stock for only 360 days then i have to pay a twenty eight thousand dollar tax on that twenty eight thousand dollars whereas if i held it for three hundred seventy days only ten days

More just barely more than a year i go ahead and pay only fifteen thousand dollars in tax so we’re talking about thirteen thousand dollars difference there guys so the numbers really add up and then you can say okay and then the compounding effect you know the extra thirteen thousand dollars then invested next year and you get a certain return and the next year

And the compounding effect over decades is massive massive so this is what you really did another reason why i believe in long term you know i have a million other reasons why i’m a long-term investor but also because the tax you get a huge tax advantage versus being someone that’s a short-term trader or something and they have to pay the normal tax rate on that

Guy so you know and it’s never mind if you’re someone that makes a lot of money your texts around a 40% tax bracket you know that way high income one mezzanine texas forty percent on a stock game versus being taxed for the fifteen percent you know and we’re talking hundreds of thousand dollars of profit it’s not millions of dollars in profits huge huge differences

There guys so you’ve got to understand that it’s just another reason that i’m a long-term investor guys so it doesn’t point number four if you sold the stock for a lot you can write it off against any stock game you had that year but you can’t write a stock walks off against like normal income or something that does not matter at all so let’s say i locked ten

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Thousand dollars in stocks this year you know i sold stocks when i took a ten thousand dollar loss i can write that off if say i had another twenty thousand dollars in games so really it’s only going to be a net net ten thousand dollar game i had on the year because i can write the ten thousand dollar walk-off against this twenty thousand oil off twenty thousand

Dollar gain i had over here so it’s only ten thousand dollars positive net net for me what i said said just lost $10,000 i didn’t make any profit that year on stock i can’t go ahead and write that off again you know say i made a hundred thousand dollars from a business or whatever i can’t go ahead and write that off it means nothing you can only write off stock

Losses against basically gains and investments so keep that in mind guys number five excuse me number five a wash sale you can’t buy you can’t sell a stock within in buy it back within 30 days and expect to try to take a lock on that stock you basically go back to getting the same cost basis you had so it’s called a wash sale so you know because otherwise people

Could pull fast one and i could go ahead and sell stock abc for for a low price right and just go ahead and sell it and try to take a loss on that and then buy it back a week later and maybe the same print but i say oh no i want to take that loss on it i have there against my stockings this year no the government doesn’t allow that they kind of got smarter too to

Not have that happen because a lot of people were taking advantage of that basically just selling a stock taking a huge loss on it then go ahead and buying it back you know immediately or within a few days or a week or whatever and basically that’s a no-no you can’t do that because it’s a sole advantage how you can basically advantage and gain on the system guys so

That’s when a wash sale is not a lot of people understand that but sometimes i see you know i suppose i’ve shocked me i bought it back and i saw a wash field i know i wasn’t educate on this as if you bought that stock back within a 30-day period you just go back to your old cost basis so you’re not going to take a gain or loss on that yet number six and last one

Here guys options or treat it the same as stocks as far as being taxed so i’m an auctions investor also basically if you know what options are you buy call options and put options you can buy short-term ones that expire over the next month it is basically betting that stock will be a certain price by a certain date when you pay a premium on that and i play that game

Too i’m an options trader i’m a long-term options trader but i’m taxed as only this i’m holding those options for a year or longer i’m text the same way and gains or losses as it would be if i helped a stock straight up in same way if you’re doing a short term you do a short term options and you’re taking losses or gains it’s going to be taxed the same way as you

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Would have stocks so options are treated the same of stocks so there’s really no difference in the taxation and between those two different products guys so i hope this helped you immensely and kind of understand the tax basis that all stock market investors need to know because you can really make the system go you know for you rather than go against you so these

Are some things to keep in mind guys leave me in the comments section if you guys have more tax related questions on own stocks or whatnot leave this video today a thumbs up if you enjoyed it if you have not subscribed yet you may want it we talk personal finance in the channel we talk entrepreneurship i’m a business owner i give away a lot of my business tips and

We talk the stock market down most of all on this channel including a video today that will hopefully help you guys with this tax season tax basics thank you for watching guys and have a great day by the way guys something is random i just remembered i just want to mention to you guys is that i’li said yes whenever you’re about to do you know thinking about doing

Your taxes and whatnot go to h&r block calm or other websites that basically have tax calculators i just use h&r block because that’s what i use but they basically have tax calculators on the website we’re using punch in all your numbers and you can kind of see what your text is are going to be like ahead of time and then that way you’re better prepared

When you actually go to file those taxes if you do it yourself you’re much better prepared on knowing you know what you’re going to get for a refund or around that amount what you’re going to get for a refund or what you’re going to have to pay in if you actually you know it’s like a pregame basically you get to see ok punching all the numbers is how much i had an

Income this is how much i had it expenses all those kind of things then you kind of know before you even go to do your taxes and it’s basically you’re well prepare and you don’t forget things guys so i do that every single year at least once it’s not quite and then i kind of know what refund or how much i’m have to pay before i even actually file my taxes guys so

I just wanted to run that by you real quick i highly suggest doing it thanks guys

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Tax Basics for Stock Market Investors! By Financial Education

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