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How does the I.R.S determine my tax from my stock trades? Do…

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Hello, my name is ***** ***** does the I.R.S determine my tax from my stock trades ?

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Do they use a 1099 from the brokerage house or other method

Accountant's Assistant: Is there anything else the Accountant should be aware of?

The brokerage house e-trade sent a 1099b to the I.R.S. The I.R.S is using my monthly statements from the brokerage house to determine my income. I always assumed they used 1099"s or w2 to determine tax owed

Submitted: 5 months ago.Category: Tax
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11/16/2017
Tax Professional: Tax.appeal.168, Tax Accountant replied 5 months ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
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Hello. Thank you for choosing this Q&A service for assistance. My name is***** am reading over your inquiry. I will respond to you shortly.

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Tax Professional: Tax.appeal.168, Tax Accountant replied 5 months ago

Q1: How does the I.R.S determine my tax from my stock trades ?

A1: It depends on if the stock was held for a short term or long term. Stock held for a year or less is taxed as short term ( at your ordinary income tax rate). Stock held for long term (more than a year) is taxed at the applicable capital gain rate, either 15 or 20%, depending upon your total income for the year.

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Q2: Do they use a 1099 from the brokerage house or other method

A2: They receive a copy of the 1099 from the brokerage house, however, it is up to the taxpayer to report the stock sales. If the taxpayer does not properly report the sale of the stock on the Forms Schedule D and Form 8949, the IRS will take it that the sale price is all gains and tax the taxpayer accordingly. You might find the information in the article at the following link beneficial to read.

http://www.foxbusiness.com/features/2010/12/16/stocks-taxes-pay.html

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