cashrevert

I've been investing a lot of my money in the stock market the past couple of years. I never understood the tax implication of my decisions.

I understand that capital gains tax depends on your income bracket. So how much taxes do I have to pay if I'm just working part time for $10 an hour...made about $4000 last year.

Also, can I deduct my margain interest for the gains I've made?

Thanks in advance for your help.

DarkFury

You'd pay zero.. cause at $4000 income per year you didn't even make it to the minimum income to pay taxes...

You still would have to file a 1040EZ... but I'd doubt that you would have to pay any taxes on that money. (unless you are being claimed on someone else's taxes as a dependent... like Mom & Dad). If you are, then you will end up paying some taxes on that $4K

(As a dependent, I think $400 is the limit for tax free income... but I'm not 100% sure about that.)

__________________


DarkFury's Pimptopia - Don't Hate the Playa, Hate the Game!
Home of the Original OG Pimp (accept NO imitations)

zippyjuan

Capital gains are only realized if you sell the stock. If you still own them, then you are not liable for taxes on them since your gains have not yet been realized- you should have recieved a statement saying what was liable to be taxed. Even if you did not make enough money to have to file a return, it is a good idea to do so since you can probably get back some of the money you had taken out. To deduct anything, you would have to itemize your deductions and in your case it is probably better to take the standard deduction if you do file.

__________________
I add new pictures to my photo gallery pretty regularly. You can see them here if you are interested: http://www.pbase.com/jeffryz

clutchy

Unless you had taxes taken out you don't even have to file. How old are you? are you parents claiming your exemption? Are the gains realized(did you sell them)? get dividends? interest?

with stocks the only implications are when you sell. You take your gains and put them against your losses. If you have a net loss you can deduct up to 3000 per year carried over till the loss is done. So if you gained 3000, lost 2000 your cap gains would be $1000 if it's long term it would be 5% of that or 50 bucks...

capital gains tax(schedule D) for your income tax bracket is 5%!!! if it's a long term capital gain(over one year held) other wise it would be 15%. It's a great time to be investing in any form of stocks or bonds the cap gains taxes are ridiculously low.


What people don't seem to get about bush is that his tax cuts help the poor too. In order to get that 5% cap gains rate your have to be below or in the 15% tax bracket. Anybody above that isn't able to get in there. the people above 15% have to pay at the 15% rate. So when people say the bush tax cuts "only are for the rich" they're either uninformed or demagogues....

__________________
LK was treated unfairly

thanks X

DarkFury

Like really "poor" people have "capital gains"... sheesh.

True "poor people" are barely scrappin' by to survive on the bare minimums.. not lookin' at their "portfolio" for growth and investment.

Just leave your rhetoric in the "politics forum" please.

zippyjuan

If you would like to discuss the Bush tax cuts, I would be happy to, but not on this thread. Cashrevert, might take a look at www.irs.gov .

cashrevert

I've made $5100 on my W2 from 2005.

In regards to my stocks,

this is what I have:
01/01/2005 -- 12/31/2005
Created: 3/07/2006 0:53 am
Entire Period
Short Term Gain 12,518.48 Long Term Gain 0.00
Short Term Loss -7,146.75 Long Term Loss 0.00
Short Term Net 5,371.73 Long Term Net 0.00
Short Term Sales 119,201.65 Long Term Sales 0.00
Short Term Cost 113,829.92 Long Term Cost 0.00

None of which are long term......which I'm starting to try now that I've seen the performance if I haven't sold any of the stocks I did in 2005.

My margain interest comes up to be $1000.91.

And to be honest with you, I don't know what my parents claim me as. I filed my EZ last year and got my tax return back. My parents does everything with their accountant and are clueless what they put me as...and I'm just as clueless with whether or not I'm a dependent.

From all your help, I'm guessing since I don't make enough income none of my gains from stocks would be taxed. Does that mean it's more advantagous for a college student like me to trade than when I actually have a full time job with salary (since long term investment doesn't seem to matter for me right now). Thanks again guys!

cashrevert

oh and also, how much would it cost to bring my taxes in to a h&r block

clutchy

Awesome!!

ok, so W2

5100, you put that against your 5000 dollar standard deduction and then you probably take your $3200 personal exemption. So you have $8200 in money sheltering exemptions and standard deduction. So if you had any federal taken out of that 5100 then you'll get it all back.

Short term gains. You need to fill out a schedule D and then you'll be paying 15% on that almost 5400 net you made. I doubt they took any withholdings from that, but you're going to end up owing some money. I don't think you can shelter capital gains with standard deductions or exemptions...


so 5400*15%= $810 (probably what you owe the gov.) minus whatever tax you get back on your W2.

1040: http://www.irs.gov/pub/irs-pdf/f1040.pdf?portlet=3
schedule D: http://www.irs.gov/pub/irs-pdf/f1040sd.pdf


it's awesome you're able to do this. I had a fake portfolio that i set up 4 years ago w/ 100,000 in it. It's now worth over $300,000!! ridiculous...


H&R, i have no idea, but from experience the local tax preparers are pretty good. YOUR RETURN IS easy do it yourself.



that's why they're poor. poor is a mindset, broke is a state of being...

zippyjuan

So on $119,000 dollars invested you made $5100, minus $1000 in margin cost- that would be $4100 net return or 3.4%. You seem to be taking on a lot of risk for a small return. Does that include your other trading expenses?


You make it sound like poor want to be poor because they don't do anything about it. Not everyone has had the chances at life you have.

cashrevert

the 119,000 is just the total from all the trades I've made
I have about 25,000 invested

gotta go to work but i'll read that in detail when i get back
thanks a lot guys!

clutchy

anyone who doesn't want to be poor doesn't have to be, that's the promise of this country. You just have to have the motivation to get out and change your life. It's not easy.

however, i'll openly admit that if i didn't have my parents driving me forward i never would have graduated from college. Life isn't fair, never will be and yes, i got a pretty good deal from the onset which i'm very grateful for.

DarkFury

That is a totally snobbish view of the situation... A kid from "rich (or moderately well to do) parents" who pay for all of the kids needs but that kid has no free spending money is "broke" but he is not "poor"...

A person who has nothing of value and no income is "poor" and "broke".

There is a difference.

clutchy

both could very well be poor, but if you see yourself as "poor" then you are doomed to continue on that track.

if you see yourself as broke, down and out for the time, then you can get yourself out of it at some point.

i don't know where rich kids came into the equation.

DarkFury

Honestly, by your comments I think you are truly blind to the point I was trying to make to you.

Try this scenario... minimum wage working single mom with 3 kids working 2 jobs making a total of 6.25 an hour for 10 hours a day. Her gross pay per year is only 16,250 (6.25 x 10 hours x 5 days a week x 52 weeks a year) BEFORE taxes.... after taxes and other deductions that number will come down.

Now... try to feed your family and live a NORMAL family life under those constraints (child care costs alone will eat her alive...). With no mommy and daddy to help you and whatnot, it's probably close to impossible.

That my friend is the definition of a "poor person"... doing what she can to make it but still falling WAY short. Be happy that you don't have to exist in that scenario.

clutchy

that does sound hard. Life is all about decisions, you have kids w/o a stable environment you're going to have to live with the consequences.

but lets take your scenario for a second.
3kids =9600 tax shelter +3200 personal +7300 head of household =20100, she doesn't pay any taxes.

EIC will give her 4400 dollars that she did not pay in.

16250+4400 = 20650 still low, but that's a decent bonus for being irresponsible and poor. These are services just off the top of my head how about we throw the myriad of welfare state services at her, and she'll probably make as much as wife and I combined last year.

not that i'm complaining, but the situation is hardly as dire as you make it out to be. I haven't even added the cost to society that her children will probably incur going in and out of prison because of a lack of parenting and role models. I think it suffices to say adoption would have been the correct course of action...

DarkFury

One thing you aren't factoring in here.... tossin all these numbers around, how much do you think the "cost of basic living" is? Rent (most likely she doesn't own her own home at that level) + food and clothing + daycare for the kids (if they are young).

Truly, even if she paid NO taxes and got public assistance, she still would be FAR from being "comfortable" and having the opportunity for investment as what sparked this conversation in the first place.

It is not your or my place to judge this person on how they live... some life decisions are made for you (i.e. getting pregnant at ages below 18 or graduation from high school... which leads to that person not getting their diploma or G.E.D.... which in turn limits their employment opportunities available). Some folks have a "safety net" in cases like that (i.e. moderate or well to do relatives that can help) but many don't... and that's what I was trying to point out to you in the first place. Also, do you really think that every "poor" person should give up their children for adoption because they can't afford them? If so... the adoption agencies surely would be overrun with kids up for adoption (pssst... there are alot of "truly poor" people out there. Maybe they just don't live in your neighborhood... )

It is VERY easy to sit back in comfort of your current financial situation and wag your finger at the folks who obviously aren't on the same level. Put yourself in their shoes to see how hard it really can be when given limited options.

zippyjuan

Maybe she did have a stable environment for her kids, but the dad was killed in an accident. Was that her choice? Perhaps her parents were either not around or also just poor so she had to get a job instead of going to school just so she could pay bills and have something to eat. So she is not qualified for any decent paying jobs. Is that her choice? Perhaps she did go to school, borrowed money to do it, and now there are no jobs in what she was trained in because the jobs went overseas or were simply lost for whatever reason, so now she has no money and can't find a job even though she made what many might have said at the time was a good decision. Was that due to her choice? Maybe she had children because she was raped. Was that her choice? What about someone in a small town that had one major employer that went bust. A person in that town owes money for a house they cannot sell and does not have money to move or just walk away from it so they have to scrape by on what they can find locally. Is that their choice? Choice implies realistic options and sometimes the choices available are not good ones. Because you had good options available to you does not mean that they were available to everyone. The theory that anyone who wants to become a success will be one is just a myth. It does not work for everyone.

Jeffbx

Wow Clutchy - I've seen a lot of people smugly sit in judgement of others, but this one takes the cake.

clutchy

Obviously life is going to be hard. It is not the government's job to make you comfortable after you've had 3 children and put yourself in the poor house. I don't buy the under 18, not you decision stuff. If you're going to have sex then you're going to have to deal with the consequences. This country won't totally hang you out to dry and it shouldn't, but it shouldn't make you "comfortable" either. You made the decision, why should the government make up for this person's irresponsibility.

life comes down to a very short list of life altering decisions. One path leads one way and another leads in a different direction. The choice is yours, contrary to what zippyjuan says. People are given freedom they get to decide what to do with it. Will they help the country or be a tax on it? choice is theirs to make and no one elses.


Men in my family have their families taken care of no matter what happens to them through insurance. Again it comes down to personal choices and responsibilities. I don't think the government should take up the slack of people who choose to be irresponsible. Yes, there are a few circumstances when people didn't choose their lifestyle, but i'd say those are few and far between, the exception rather than the rule. I don't think we should set our standards on the LCD lowest common denominator.

yes choice implies realistic options, and maybe those options have been closed down based on previous options. One way or another you get to where you are not because of someone else but because of yourself.

clutchy

I was voted THEE most judgmental person by a unanimous verdict of my peers. I wouldn't call it smugness though. It's experience. I do volunteer tax returns for the poor. I've also worked in group homes where the poor's ill behaved fatherless children are sent b/c they didn't fit into the prison system. 4 out of 6 are black and across the board they don't have fathers. They don't have stable family units and typically their parents have 3 kids or more. This is from a full year of working at different locations and polling every one of them.

so i'm a little jaded, and not really interested in footing the bill for people's irresponsibility. I'm talking experience here, 4 years of social science training and 1.5 years of work experience tell me there are massive problems with our system. None of the social systems, as far as i can tell, actually have an affect. They do cost alot though.

DarkFury

A glass house just got wrecked by a boulder as you once again pass judgement on a person.


Just let them all eat cake... I guess.

Bottom line... "poor people" don't have the money to "invest" and do the things that your ORIGINAL post in this thread suggests.

All the rest of your "rhetoric" on the topic just states your personal opinion and opposition of why people shouldn't be poor and their obligations towards that and whatnot which is totally irrelevant to the thread topic.

clutchy

these "people" are hypothetical, what do you want me to do?

original topic, was about college kid investing in stocks and asking for tax advice.

I stated that people in the 15% bracket and below get a nice low rate to invest if they can, be they poor or otherwise. The tax system is designed to take it easy on those who have a hard time. It is also designed so that the wealthy pay more.


if you want to call personal experience and observations "rhetoric" then that's your own bias coming into play. I make observations and draw conclusions from those personal observations. If you want to call that judging then so be it. Some people need their conduct judged, that's why we have laws and rules of society.

first rule in the 12 step: admit you have a problem, not stop the judging...

DarkFury

Actually what you said was the following:

My reply to you was that the "true poor" don't have investment income to take advantage of this "cut" and whatnot... and then we got into the whole poor versus broke discussion which eventually led to you waggin' your finger at the poor and why they should blame themselves for being poor and such (Of course paraphrasing here... I don't wanna have to quote everything said again ad nauseum).

So don't cut your feet on the broken glass.. Mmmkay?

From your own experience and observations are you've passed judgement based on what you've seen/heard/thought you saw or heard... and honestly it's not really for you or me to judge them. Also in light of the TOPIC it is still IRRELEVANT!

Pretty much start a new topic on that subject if you feel it warrants continued discussion.

zippyjuan

Back to that original point- people at lower income levels do not have excess income to put into things that qualify for tax deductions that those at the higher income levels can. They cannot get a loan to buy a house. They are not buying dividend paying stocks or even very many stocks. They do not have inheritances to pass down. Higher incomes are thus more able to take advantage of the tax breaks that Bush and the Republican Congress passed. Thus most ot the benefits of the tax cut went to those at higher income levels. And that is true however you want to measure it- by absolute dollar terms, percents of income, or whatever. Tax rates on lower incomes were not changed nor was the minimum qualifying income level for taxes to start. This is supported by a report put out by the Congressional Budget Office- considered to be falrly unbiased despite being run by the Republican controlled Congress. http://msnbc.msn.com/id/5689001/