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  1. #1

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    Cashing out stock; how much goes to taxes?

    I am thinking about cashing out some stock. To make it simple, lets say the total account as of today is worth $20,000 and I want to Sell All shares and just cash out completely. I am trying to figure out how much of that $20K I am actually gonna get if I decide to cash it out, but I don't know how Uncle Sam takes out the taxes? I know I have to pay accounting/processing fees of .12 cents a share, but how do you figure out the tax hit?

  2. #2
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    The quick and simple answer is that you'll pay 15% of the profit of each share if you've held it longer than a year. Less than a year and you'll pay your normal tax rate. Do you have a broker?

    Of course there's some calculating and research to do if you bought the shares at different times.
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    Are yours just out of a regular account? I do mine with a tax-free savings account, so I pay zero taxes. It's great especially because I prefer day trading... I like to buy and sell everyday as opposed to holding any stocks haha.

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    Quote Originally Posted by Spazactaz View Post
    Are yours just out of a regular account? I do mine with a tax-free savings account, so I pay zero taxes. It's great especially because I prefer day trading... I like to buy and sell everyday as opposed to holding any stocks haha.
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  5. #5

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    What Milanesa said. Take the total amount you paid for the shares, subtract that from the amount you sold them for, less commission. That's your profit. Then apply the relative rate - 15% for long term capital gains, your regular rate for short term.
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  6. #6
    Corgi Wrangler
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    All assuming you're making a profit, 15% long-term, roughly 30+% short-term. It's not treated as part of your normal income if it's long-term and it's maximum of your normal rate for short term. (Hence the idiocy of people whining about Mitt Romney paying "only" 15%--he's paying the same rate any other investor is, on money from income he already paid taxes on. Capital gains and dividend taxes are basically there to screw people who invest, no matter how little they make from other sources of income. I'm way, way below the 'wealthy' level, though since I don't have children out of wedlock I still wind up paying on income, and I pay the same cap gains/dividend rate he does, when really neither of us should pay anything on that money.)

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    Quote Originally Posted by danceronice View Post
    ...rant...
    Take it to PI.
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  8. #8

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    Oh lawdy. I don't know if I be dat smarts to figurin' dat out on my own. I thought maybe it was just a straight percentage number were I could see easily that check would be like $10K after taxes or something. I need a new car and was thinking cash this out and I got the cash for the car so no loan or lease crap to deal with. I've had this stock about 20+ years, have been automatically reinvesting the dividends since opening, and over the years have automatically bought about $3000 per year via direct deposit, so I've been constantly buying shares at all different prices. Me thinks I shall find another way to get the car and leave it sit a while ..... or get an accountant.

  9. #9
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    It's not really that complicated, and your brokerage firm should have the calculation already done for you and most likely it's available immediately on their web site. Look for a section in your account that shows 'cost basis.' That's what you've paid in, the balance is your gain, and since you've had it forever it's all at the 15% rate. You may have a small bit that's short-term gains from your DRIP but it will be a negligible amount compared to your overall tax obligation.

    And at the end of the year, you'll get a 1099 tax statement from your brokerage firm that will show long term vs. short term gains. No calculation required.
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  10. #10

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    Yep, your broker should be able to tell you your cost basis (what you originally paid for all the shares) and then you can calculate your gain * 15% = tax.

  11. #11
    Sexy Superhero
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    Another note - the stock broker will not withhold the taxes. You'll need to compute the amount you'll owe and then either make an estimated tax payment or, if possible, put the estimated tax in a savings account and pay with the return when it is due. The estimated payment will be needed if your standard withholding will not equal or exceed your 2011 tax liability.

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