Question

How does investing in stocks work out during tax season

Forum|Forum|5 years ago
June 23, 2020
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TurboTax Deluxe Online

Employee

Just investing in stocks has no affect on your tax return unless you are investing in a tax deferred account of some type such as an IRS which can reduce taxable income if you are eligible to make a contribution.

A tax event does not occur until you sell stocks. If you hold them at least a year plus 1 day, the gain on the sale is taxed as long term capital gains which has generally a lower tax rate than a short term capital gain held for less time. Short term capital gains are taxed as ordinary income at your marginal tax rate.