Stock Market For Beginners And Taxes

Lets say you bought and sold your first stock and made a gain. Please see stock market for dummies. Congratulations!....but you now owe taxes.

That's right, you know the saying "there are only two things guaranteed in life......death and taxes". The IRS want their cut of that gain you just made so be sure to keep all records. When tax time comes you are going to have to fill out Schedule D and report your gain. If you are going to be investing in the stock market you are going to have to keep track of each transaction whether it is a gain or a loss.

Every stock sale you make, including losses, is going to have to go on that Schedule D. If you are going to trade stock, you have to understand and accept this. There is no getting around it as the brokerage companies are required by law to report all your transactions to the IRS. If your records do not match what is reported, this will trigger a red flag and you may very well be audited. If not audited, you will at least be contacted by the IRS and told that your records don't match what was reported by the IRS. Can penalties be far behind?

If you sell stock and have a loss for the year, you can use up to $3,000.00 of that loss. If your stock trading loss was bigger than $3000.00, the amount over that has to be carried over until next year. The stock market for beginners is hard enough before you add in the taxes. Unfortunately, the government doesn't care.