How do you do taxes on money made off stocks?
Paul E asked:
I want to buy and sell stocks on a daily basis, but the people I’ve talked to said that taxes were to complicated to sell and buy daily. Is there a easy way to do taxes correctly?
I want to buy and sell stocks on a daily basis, but the people I’ve talked to said that taxes were to complicated to sell and buy daily. Is there a easy way to do taxes correctly?
Wow, if you really have to ask this question, absolutely DO NOT day trade stocks. It’s going to be a disaster.
I feel sorry for the person who rated this answer negative.
You have to track the investments using something like Money or Quicken or a proprietary program that tracks your investment activity.
It can be time consuming, but if you are making money, that is a small price to pay.
Unfortunately, there are not that many people who are successful day traders anyway.
It is a nightmare. Last year I sold some stock I held for several years and purchased at different prices through an employee stock purchase plan.Since stocks were purchased at different prices it was impossible to calculate how much I made. I had to guess and then I worried that I had calculated wrong. Unless you keep meticulous records and have someone do your taxes, don’t do it.
You have to track your cost basis (what you paid) and your sell price. The capital gain/loss is the diffrence and you have to pay capital gains tax on that when you file your income tax return. Remember that 99 percent of people who try day trading lose money. You should invest, not trade.
You will get confirmations of all the trades you do. You should also keep a daily blotter for yourself to keep track of all you gains and losses. You will see the total cost to buy and the total cost to sell. The difference will be your net profit or net loss. You can offset your profits with your losses and the difference will be your net gains (or losses) that you will be taxed on. Good Luck