What are the taxes if a security is held under a year?

If its held over a year?

Thanks,
Jesse

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Originally posted by Jeremy:
Gains from a stock held less than 1 year are taxed at your current income tax level. After 1 year, you are taxed 5% on gains I believe. It could be different than 5%, I forget because all of my stocks held over 1-year are in my Roth IRA, where capital gains are not taxed

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Originally posted by Jesse K:
So since i dont have a job, therefor making no money, does that mean I can't get taxed on gains?

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thought that was too easy of a way to beat uncle sam.

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Originally posted by tommy:
No because the money you make with the stocks IS your income. So if you don't have a job but you make $20,000 then it's like having a $20,000 job and paying taxes on that amount. If you have a job then your salary plus the money you make on the market becomes your total income.

[This message has been edited by tommy (edited February 05, 2004).]

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Originally posted by VNGNTN1:
JESSE
Had you put the money in a ROTH IRA there would be 0 tax
VAN

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Losing a $1000 dollars last year playing the pennies wasn't so bad when I did my taxes. It was a nice deduction, or credit....don't remember wich one it was put under.

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Originally posted by BetNitAll:
HA HA HA

Losing a $1000 dollars last year playing the pennies wasn't so bad when I did my taxes. It was a nice deduction, or credit....don't remember wich one it was put under.

This year will be a different story. PGHI (GZFX)is on track to make me more money then I made in my job last year.

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Originally posted by VNGNTN1:
JESSE
Yeh I know most of the guys on the board are short term thinkers, but tax can be an extremely significant factor. I always fund the max/per year.
VAN

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Thanks for the information Debi, apreciated.

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Originally posted by WWJD-thru-me:
Jesse K -A Roth IRA allows withdrawal of principal before retirement without a penalty. To fund one you do need income. At your age it would be amazing the amount of wealth you could accumulate in a Roth IRA and you could even take out the principal for college and play the interest. -I like that idea. -Debi

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Originally posted by WWJD-thru-me:
Jesse K -A Roth IRA allows withdrawal of principal before retirement without a penalty. To fund one you do need income. At your age it would be amazing the amount of wealth you could accumulate in a Roth IRA and you could even take out the principal for college and play the interest. -I like that idea. -Debi

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Definately, START EARLY!!!!!

YOu can trade and invest in stocks everyday, but you will not understand the value of putting some away for retirement as early as possible until you are close to retirement. You're not going to have social security, you don't want to rely on a 401k from your employer... take charge of your retirement and be on track to start it earlier than everyone else.

Right now the maximum contribution per year is 3k, but that is slowing climbing the next few years. You don't have to put that much in, but as soon as you can afford to do so, you should!

Anyway, say you start a roth when you're 18, and you begin with 1,000/year. Then say on average you make a 15% return each year (not too hard to do). Well, do that for 5 years and reinvest your gains and you could very easily be sitting on 10,000 dollars. That's just 5 years only investing 1k and reinvesting the interest!

If you are active in your roth, and trade it actively and/or contribute more money than 1,000 each year, you could easily be sitting on a good deal of money before you're 30... and when you start to withdraw all of that money, it's TAX FREE! So by the time you retire, you could realistically have a million dollars in your account... wouldn't it be nice to not have to give uncle sam a nickel?

Remember, a little bit goes a long way over a long period of time. Start now, and enjoy the best years of your life without worrying about money.

1) Can I invest in a Roth now or do I have to wait to show an income?

2) I'm sill not clear on the tax aspect. How long does the money have to stay in the Roth before I can withdraw tax free?

Thanks for the help..

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Compensation Defined
For individuals, compensation that is eligible to fund a Roth IRA includes wages, salaries, commissions, bonuses, and other amounts paid to the individual for services the individual performs for an employer. At a high level, eligible compensation is any amount shown in Box 1 of the individual's Form W-2.

For a self-employed individual or a partner in a partnership, compensation is the individual's net earnings from his or her business, less any deduction allowed for contributions made to retirement plans on the individual's behalf, and further reduced by 50 percent of the individual's self-employment taxes.

Other compensation eligible for the purposes of making a participant contribution to a Roth IRA includes taxable amounts received by the individual as a result of a divorce decree.

Ineligible Compensation
The following sources of income are not eligible to be contributions to a Roth IRA:

Rental income or other profits from property maintenance.

Interest and dividends.

Other amounts generally excluded from income.

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For tax-free withdrawls, you must meet some basic requirements:

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For a distribution to be qualified, it must occur at least five years after the Roth IRA owner established and funded his/her first Roth IRA,* and the distribution must occur under at least one of the following conditions:

The Roth IRA holder is at least age 59 ½ when the distribution occurs.

The distributed assets are used towards the purchase or rebuilding of a first home for the Roth IRA holder or a qualified family member. Qualified family members include the IRA owner's spouse, a child of the IRA owner and/or of the IRA owner's spouse, a grandchild of the IRA owner and/or of his/her spouse, a parent or other ancestor of the IRA owner and/or of his/her spouse. This is limited to $10,000 per lifetime.

The distribution occurs after the Roth IRA holder becomes disabled.

The assets are distributed to the beneficiary of the Roth IRA holder after the Roth IRA-holder's death.

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There are a lot of other details, but that is the general information that will be of most interest to you. The best part is, the earlier you start, you may find that in 5 years after you opened your account you want to buy a house.. who wouldn't like to take 10 grand out for part of a down payment tax free? Same thing for higher-education expenses.. in 20 years you could have a kid getting ready for college, you can also then use that money tax-free without penalty to fund their education.

THere are just too many benefits to not open a roth IRA for a young person in my opinion. The best part over a traditional IRA is that when you're young you are most likely in the lowest or very low tax bracket. So any money you make to put into the roth is taxed at a very low level, and then not at all when you withdraw it, when you could be in the highest tax bracket. With a traditional IRA, you get to write tax contributions off on your taxes... but in 40 years, if you are in the 38% tax bracket, you are then taxed on all of that money which could be tens of thousands of dollars.

So again, start as soon as you can afford to do so, it will pay off in the long run more than you could ever immagine THe best part is, you can trade in that account actively just like a regular brokerage account, and if you hit it big with a few stocks, you can quickly grow your IRA without paying a cent in taxes for those gains

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Originally posted by accesscard18:
Talking about tax, can you deduction your commission fee???

thanks

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Originally posted by Degs:
I have a question on this tax thing,
but in a different approach. We
have been trading for appoximately
one year. Not one time did we take
any money out of the margin account.
It stayed in there to reinvest in
other stocks. Our understanding was,
as long as the money didn't go the
hand, you couldn't get taxed on it, and
if you did have a hefty amount, then
you invest it in real estate, etc., not
to buy a car, boat (luxuries). Can
someone answer why we got the 1099s
from the broker?
TIA
Robin

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The problem I face is I'm employeed off the books so I have no w-2 form. Is there any other way around this?

Thanks for posting the acceptable reasons for withdrawals. I'm guessing my first withdrawal (if any) would be for a house and not 41.5 years until I reach the required age.

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Originally posted by Jesse K:
Once again Jeremy thanks for the answers. What do you do for a living if you dont mind me asking?

The problem I face is I'm employeed off the books so I have no w-2 form. Is there any other way around this?

Thanks for posting the acceptable reasons for withdrawals. I'm guessing my first withdrawal (if any) would be for a house and not 41.5 years until I reach the required age.

Thanks again,
Jesse

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Well, I own 3 businesses (one of which I'm in the process of selling) and trade in my free time

But if you are being paid "under the table" so to speak, then yes that could be a problem since it looks like you are receiving no income, when infact you technically are, just not reporting it.

Anyway, even if you are being paid under the table and not paying taxes, etc.. it might be in your best interest to report at least some of that to the IRS as misc. income so that you can at least qualify for an IRA.

Looks like my dreams are your reality. After college I want to own my own business' also.

If you dont mind, and have the time, please email me at JKrupski86@yahoo.com, I have a few other questions.

Thanks for all the help.

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Originally posted by Jeremy:

Well, I own 3 businesses (one of which I'm in the process of selling) and trade in my free time

But if you are being paid "under the table" so to speak, then yes that could be a problem since it looks like you are receiving no income, when infact you technically are, just not reporting it.

Anyway, even if you are being paid under the table and not paying taxes, etc.. it might be in your best interest to report at least some of that to the IRS as misc. income so that you can at least qualify for an IRA.

Hope that helps I'm not a tax expert by any means, but after quite a few years of self-employment, filing corporate taxes, etc.. the IRS does start to make some sense

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