5 Ways to Beat the Tax Man | How Stocks are Taxed

Taxes suck! I know we need to pay for public services so I don’t mind paying my fair share but the government has made investment taxes confusing for a reason…to make you pay more than you should. Taxes on stocks can be extremely difficult to figure out unless you know exactly what to watch and the tax tricks to get around it.

In this video, I’ll show you how taxes on stocks work and the two factors that determine how much you pay. I’ll give you a step by step to capital gains taxes and how dividends are taxed. I’ll also show you what Robinhood reports to the IRS and what happens if you don’t report stocks on taxes. Then I’ll reveal the five tax strategies I used with private wealth clients to defer, reduce and eliminate their taxes on stocks.

The tax rate you pay on stocks depends on how long you hold the stock and your income level. This is why stock trading is so expensive because you end up paying income taxes on the profits, tax rates that can be as high as a third or more of your profit. Dividend stocks can be even worse because you pay taxes on the money you collect every year whether you sell the stock or not.

What the government won’t tell you is there are tax tricks you can use, all totally legal, to cut your taxes next to nothing or wait decades to pay them. Strategies like tax loss harvesting, using charitable remainder trusts and putting dividend stocks in a non-taxable account can save you thousands of dollars in taxes every year.

0:00 How are Stocks Taxed
2:22 How Taxes on Stocks Work
2:55 Capital Gains Taxes - Short-term vs Long-term
3:48 Tax Rates on Stocks - Short-term vs Long-term
7:02 How are Dividends Taxed?
9:25 How is Stock Trading Taxed?
9:42 When do you Pay Taxes on Stocks?
10:23 What does Robinhood and Other Platforms Report to the IRS?
11:28 What Happens if You Don't Report Stocks on Taxes?
11:57 How to Avoid Paying Taxes on Stocks...Defer, Reduce, Eliminate

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
#taxes #investing #stocks

[martasati]

As an investment enthusiast, I often wonder how top level investors are able to become millionaires off investing. I do have a significant amount of capital that is required to start up but I have no idea what strategies and direction I need to approach to help me make decent returns

[donnabrown]

Thanks.😇I learn so much from your expertise. Thanks again. Now to remember it.😳

[Ducksdividends]

The most insightful video I’ve seen in a while! Thank you sir

[TooLateForIeago]

Thank you for this. There are several stocks I own that no longer fit my goals, and I've been thinking of unloading them. Now I'm holding them for a while longer.

In the meantime, I keep a running estimate of what my dividend tax bill will be and make sure to have enough cash to cover that amount. Cuz if I spend or reinvest it all, I might come up short in April 2022.

[Lou_Snuts]

Great summary! Maybe on the next one, you can discuss utilizing investment (margin) interest, which is an itemized deduction, to offset income from short-term capital gains and ordinary (non-qualified) dividends.

Of course, the taxpayer must qualify for itemizing.

Also, loading up on qualified dividends and long-term capital gains, up to the maximum allowable for the type of filer (single or joint) can be advantageous. For qualified dividends on "dividend king" and "dividend aristocrat" stocks are very predictable. Thus, planning around these dividend declaration dates can help in tax planning and timing, especially for retirees who count on dividends as a major source of income.

[younginvestingjedi]

Does dividend reinvestment count as collecting dividends?

[Daniel_Grgic]

Great advice!!! Thank you for helping me keep my money!

[cenk]

If the IRS already has the information... why do we have to intervene?!?!

[edwardmaynard]

I was wondering about when your able to pay or how to go about paying tax on dividends. Are you able to pay tax each month or do you have to pay at the end of each year? For example if you make dividends of 200 a week of a total 800 a month can you pay taxes of the 800. Instead of the 9600 at the end of the year on tax.

[JaynamShah]

Can you explain charitable deductions which pays 5 % in detail ?

[nitosuarez]

Thank you!!! So I guess short term gains apply to options??? Or is that totally different?

[carlmazziotti]

Quick question. If I sell long term gains stocks does that adjust my tax bracket? I'm trying to lock in zero and if I close some positions that could bump me out.

Please let me know.

[Frank]

Is it possible you can explain taxes for “Options trading?”

[JosephDickson]

Taxes are why I'll never day trade. It's just not worth the stress. When I buy any stock or ETF I first decide if I am willing to hold it at least 365 days. If not, I don't consider it to have enough value to buy in the first place. Admittedly, this means I lean towards adding to my index fund holdings over any individual stock.

[nas]

Say you start with $500 and you make $500 day trading but then lose those $500, and win and lose several times over, are you still required to file taxes? If it's a custodial account for a minor, would the parent pay the taxes?

[cwboyslife]

When them files show up I make sure I get them out for my taxes and I haven’t even cashed out yet just putting in and moving the money around in my brokerage account

[jessehernandez]

I plan on holding long term and having a home by the lake behind me

[mathewwillner]

So if I hold a security forever, I make ~30 percent more per year on that security if I don’t sell it? Because I am avoiding taxes on it all together!?

[Simonjose]

Wait. I have a handful of dividend stock that I got for free on RH. It's like. 12 cents and .08 cents. I'm gonna have to worry about taxes?

[Arctic_Fox_on_Pawz]

Do you like SLVO OR USOI as a monthly div stock?