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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11609
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I'm from south Africa working in the USA and thinking of

Customer Question

Hi I'm from south Africa working in the USA and thinking of getting into the stock market I just want to know how my tax is going to work on the stock I'm buying and if I just pay tax on the money I win and withdraw or on every stock I make some on
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

...

Yes, when you sell a stock for more than it's purchase price you will be taxed on what is called a "capital gain," (a stock being a capital asset).

...

There will be NO capital gain (or loss) UNTIL you sell.

...

If you hold the stock for a year or more before selling you will get the lower LONG TERM capital gains rate ... (If you sell before you've held for a year, the gain will be taxed at the higher ordinary income tax rates - simply added too your other income for the tax year.)

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You may also receive dividends from the stock if the company declares a dividend from it's profits.

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Long-term gains and qualified dividends are taxed at

  • 0% if taxable income falls in the 10% or 15% marginal tax brackets
  • 15% if taxable income falls in the 25%, 28%, 33%, or 35% marginal tax brackets
  • 20% if taxable income falls in the 39.6% marginal tax bracket

...

And here are the tax brackets for a single filer (just to give you a feel)

...

Single Filing Status

[Tax Rate Schedule X, Internal Revenue Code section 1(c)]

  • 10% on taxable income from $0 to $9,075, plus
  • 15% on taxable income over $9,075 to $36,900, plus
  • 25% on taxable income over $36,900 to $89,350, plus
  • 28% on taxable income over $89,350 to $186,350, plus
  • 33% on taxable income over $186,350 to $405,100, plus
  • 35% on taxable income over $405,100 to $406,750, plus
  • 39.6% on taxable income over $406,750.
Expert:  Lane replied 1 year ago.

SO yes, you will be taxed on GAINS only when you sell .. AND only if you sell for a gain (more than you have invested IN the stock) BUT ... you can also have income from the dividends that the stock may pay.

....

Please let me know what questions you may have from here

...

Lane

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