Planning for short/long term capital gains


A

Adonis Vargas

I am planning on getting into the market for trading stock and building
a portfolio. When figuring short-term or long-term capital gains tax
this involves the sum of gain with total income for the year. This in
turn may move me into another tax bracket. Given this, when performing
trades in the market and if I do not withdraw this gain from the
financial institution, will this still need to be included in my tax
claim for the year or does this apply to only the funds in which I
withdraw from the institution?

Sorry for asking such a remedial question, and please correct me if I am
wrong.

Any help is greatly appreciated.

Adonis
 
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J

joetaxpayer

Adonis said:
I am planning on getting into the market for trading stock and building
a portfolio. When figuring short-term or long-term capital gains tax
this involves the sum of gain with total income for the year. This in
turn may move me into another tax bracket. Given this, when performing
trades in the market and if I do not withdraw this gain from the
financial institution, will this still need to be included in my tax
claim for the year or does this apply to only the funds in which I
withdraw from the institution?
When you move money between accounts there is no taxable event.
When you sell a stock at a gain or loss, you claim that gain (loss) in
the year it occurred, regardless of whether or not you withdrew the
money or bought something else with it.

By the way, if you plan on 'trading stocks' you are likely to have more
losses than gains. Even the pros have a tough time beating the averages.
But that wasn't your question.

JOE
 
W

Will Trice

Adonis said:
When figuring short-term or long-term capital gains tax
this involves the sum of gain with total income for the year. This in
turn may move me into another tax bracket.
In addition to the items that Joe and Tad have said, I'd also point out
that long term capital gains will not bump you into another tax bracket
since the taxes are figured separately. However, long term gains can
make you ineligible for other tax deductions that are based on income.
Short-term gains can bump you into the next bracket, though.

-Will
 
W

Will Trice

Will said:
In addition to the items that Joe and Tad have said, I'd also point out
that long term capital gains will not bump you into another tax bracket
since the taxes are figured separately. However, long term gains can
make you ineligible for other tax deductions that are based on income.
Short-term gains can bump you into the next bracket, though.
Oh, and I suppose long term gains could bump you up into a higher
*state* tax bracket, depending on the state.

-Will
 
R

rick++

I've pretty much migrated to index funds to control taxes.
When your investments are multiples of your income, the
tax fluctuations can be significant. I implement asset
balance by putting NEW money in appropriate places.
 
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P

PeterL

I am planning on getting into the market for trading stock and building
a portfolio.

Trading stocks and building a portfolio are two different things. Get
to know each method and pick the one that's right for you. I buy good
company stocks at reasonable prices and hold them for long term (i.e.
building a portfolio). I don't worry too much about taxes.

When figuring short-term or long-term capital gains tax
this involves the sum of gain with total income for the year. This in
turn may move me into another tax bracket. Given this, when performing
trades in the market and if I do not withdraw this gain from the
financial institution, will this still need to be included in my tax
claim for the year or does this apply to only the funds in which I
withdraw from the institution?
Once you sell a stock or mutual fund in a taxable account, it's a
taxable event, regardless of what you do with the proceeds.
 
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