Taxes And The Stock Market For Beginners

 The stock market for beginners can be quite an intimidating prospect. Figuring out all the terminology and what it all means can be overwhelming. Unfortunately, you must add that once you start trading stock, you will be responsible for reporting and paying tax on your trades.

Lets assume you bought and sold your first stock and where lucky enough to make a gain. Congratulations!....but you now owe taxes. You know the saying, "there are only two sure things in life......death and taxes". Sure enough, the IRS is going to want it's cut of that nice gain you just made.

When you start stock market trading, you must be sure to keep good records of all transactions.

When tax time comes you are going to be required to fill out Schedule D and report the gain. In order to do this you are going to have to make sure that you have precise records of all your buys and sells and the dates they took place. Stock market trading just made your tax life a little tougher and there is nothing you can do about it.

It is important to note that every single time you sell a stock, whether it be for a gain or a loss, is going to have to go on that Schedule D. The brokerage companies are required to report all your transactions to the IRS and so there is no escaping it. If you fail to report your gains and losses, your information will not match what the IRS has on you and bad things will start to happen. At best you will be required to make your return correct and at worst you will owe more money in penalties and fines.

If the stock you sell for the year adds up to be a loss, you can use up to $3000 of that loss on your return. Anything over that amount in losses has to be carried forward until the next year. This is just another thing that makes reporting your stock trading gains and losses a headache.

A Short Guide On The Stock Market For Beginners