What are the tax implications of trading profit?
What are the tax implications of trading profit?
- Thread starter ScottCarsonMVP
- Start date
Implications are you pay tax on profits. Any other questions I can help you with?
There is not much information given in your question... which makes it a bit hard to help. Let me try nonetheless, but I will need to make quite a few assumptions.
Assuming you are located in the US, and are trading equities, you will need to tax your capital gains, when a taxable event occurs, i.e. you sell your shares. Until then, you don't pay taxes, regardless of the (unrealized) gains. Now, when you sell your shares, there is an important distinction: if you held the shares for one year or less, you pay tax on short-term capital gains, which is the same rate as your income tax. If you held your shares for more than one year, you pay tax on long-term capital gains, which is a reduced rate of 15 or 20%. Losses can be deducted from other taxes, but no more than $6k per year. When you sell shares, and buy essentially the same investment again within 30 days or less, this is considered a wash sale. For wash sales, you can't deduct the loss; instead the loss is added to the cost basis of the next trade.
Options on indices are tax advantaged; capital gains are considered 60% long-term, and only 40% short-term. I don't know about futures.
Cheers, Felix
actually, max loss deduction per year is $3k. but let say you have more than $3k loss like $6k. you can deduct $3k, and then you can roll over the other $3k to the next tax year.
I was after more CGT or IT implications and allowances available but thanks for input : )