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Started By
Message
Capital gains tax
Posted on 12/19/14 at 3:53 pm
Posted on 12/19/14 at 3:53 pm
How much money do I have to make in capital gains/dividends before it starts getting taxed?
5
Posted on 12/19/14 at 3:59 pm to white perch
$1
Posted on 12/19/14 at 4:00 pm to white perch
$1 of dividends or realized gains.
Posted on 12/19/14 at 4:01 pm to white perch
YOu are only taxes when you sell a stock, or collect cash dividends. You are not taxed while that stock is in your portfolio, or if you are reinvesting dividends.
Posted on 12/19/14 at 4:11 pm to TigerTatorTots
quote:
You are not taxed
quote:
if you are reinvesting dividends
That's not true. Dividends are taxed whether or not you reinvest them or take them as cash. If you reinvest them, you pay tax on the dividend, and the amount of dividend becomes your basis in the shares you receive due to the reinvestment.
Posted on 12/19/14 at 4:13 pm to white perch
Well, every dollar is subject to taxation.
But, you have to have taxable income to be taxed. So if your entire income for the year was a $5,000 capital gain, then the amount of your personal exemption and standard deduction would wipe out your taxable income, and you would pay no tax.
Also, qualified dividends and long term capital gains are taxed at a 0 percent rate if your taxable income is in the 10 or 15 percent brackets.
But, you have to have taxable income to be taxed. So if your entire income for the year was a $5,000 capital gain, then the amount of your personal exemption and standard deduction would wipe out your taxable income, and you would pay no tax.
Also, qualified dividends and long term capital gains are taxed at a 0 percent rate if your taxable income is in the 10 or 15 percent brackets.
Posted on 12/19/14 at 4:16 pm to LSUFanHouston
I am very new at investing, but that is news to me. I was always under the impression that an automatic reinvest program would not tax the dividends until you sold the shares
Posted on 12/19/14 at 4:17 pm to TigerTatorTots
You pay taxes on all dividends and capital gains distributions every year. When you sell your shares your basis is adjusted which gives you credit for paying taxes each year.
This post was edited on 12/19/14 at 4:20 pm
Posted on 12/19/14 at 4:24 pm to white perch
It's a good idea to avoid buying mutual funds around the capital gains distribution dates. If this is about the LGILX shares you hold check out my post in the other thread.
Posted on 12/19/14 at 4:31 pm to TigerTatorTots
quote:
I was always under the impression that an automatic reinvest program would not tax the dividends until you sold the shares
If you are very new to investing, you might not have a lot of money tied up in a particular stock/fund. The company/fund is not required to send you a Form 1099-DIV if the amount of dividends/cap gain dist (if a fund) is $10 or less per year.
But many send out a 1099-DIV no matter the amount, and whether you get one or not... it's supposed to be taxed.
Example, on October 1 you purchased 10 shares of XOM at 94.50/share, so you have a basis of $945. The November dividend is 69 cents per share. Total $6.90. Your new total basis is $945 + $6.90 = $951.90. Your total shares are 10 plus whatever fractional shares that $6.90 got you.
Posted on 12/19/14 at 11:50 pm to LSUFanHouston
LSUHouston - I am curious, what is your financial background? You speak the truth.
Posted on 12/20/14 at 7:41 am to matthew25
Matthew - thanks.
I'm a CPA. My practice focuses on tax, consulting, and accounting issues for small business owners, professionals, and high net worth clients. I think one reason I've bern successful in my career is that I really try to break things down so my clients understand them. Most of them are good at what they do but not good at financial issues. But I want them to know what's happening since it's their money.
A lot of people in accounting hate public accounting and can't wait to get out, but I think it's great, especially being able to work with my clients every day.
I'm a CPA. My practice focuses on tax, consulting, and accounting issues for small business owners, professionals, and high net worth clients. I think one reason I've bern successful in my career is that I really try to break things down so my clients understand them. Most of them are good at what they do but not good at financial issues. But I want them to know what's happening since it's their money.
A lot of people in accounting hate public accounting and can't wait to get out, but I think it's great, especially being able to work with my clients every day.
Posted on 12/20/14 at 8:29 am to LSUFanHouston
If I have a custodial account for my child, how much can she get in dividends per year before I have to claim them on my taxes?
Posted on 12/20/14 at 8:47 am to LSUFanHouston
quote:
That's not true. Dividends are taxed whether or not you reinvest them or take them as cash. If you reinvest them, you pay tax on the dividend, and the amount of dividend becomes your basis in the shares you receive due to the reinvestment.
This is my understanding. It's bullshite, but most of our taxes are bullshite.
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