Short term stock trading?
Recently, with the volatility of the Market, I have begun to buy stocks and when they go up by few hundreds $, I sell, knowing that it will drop again, and repeat the process. The financials (C, JPM, WFC) are so predictable. I feel nervous about what I am doing. Do I just need to pay the taxes on the profits as if they were CD interests, short term Cap gains, and regular income? I do not want to be surprised when doing my taxes. But I’m having so much fun!!
Comments
They would be short term capital gains (net of losses) reported on Schedule D. Short term gains are taxed as ordinary income.
You are doing short term trading. All gains in this case are short term taxed at ordinary rates. Keep in mind that if you selll a stock and you lose money, you have to hold off on buying the same stock for 31 days to avoid wash sales.
Record each trade on Schedule D. Alternately you can attach a printout of all of your trades to Form 8453 and mail that in as a backup to your e-filed return which shows the net gain or loss only on Schedule D.
Your net gain is taxed as ordinary income.
If this is something that you plan to continue doing and doing a lot of it please contact me. I am an investment tax specialist and can give you some guidelines.
August 28th, 2010 at 3:02 pm
Your profits on short term stock trades (assets held less than 1 year) are short term capital gains. On the U.S. Individual Income Tax Return,
Form 1040 you report Capital Gains and Losses on "Schedule D and Schedule D-1 (continuation sheet for Schedule D).