Hi everyone. I am new to investing and have a quick question about taxes.
Let’s say I bought a stock at $50 and sold it in the future at $150. So I gained $100 in profit.
Now I use that $150 to buy a new stock and it goes down to $25 and I sell it. Now overall I lost 25 dollars from the start.
In this scenario do I still need to pay capital gains tax on that initial $100 profit I made? If yes is it possible to pay capital gains tax immediately after selling a stock? Or do I need to wait until I file my yearly taxes?
If you made both of those trades in the same calendar year and you report your transactions on your taxes then no. Technically you’ll have a gain on trade 1 that is offset by the loss in trade 2.
If you gain the money in december and lose it in january then yes, at least until the following year’s taxes when you can report the loss.
> If yes is it possible to pay capital gains tax immediately after selling a stock?
You can pay quarterly taxes although it would be overkill for $100 in profit. If you’re really worried set aside 50% of profits in an HYSA every time you make a successful trade so you’ll have more than enough to pay your taxes.
I believe you are on the hook for the gains on stock A. However, you can probably wrote off the loss on Stock B. Your broker will send you forms for taxes every year.
Maybe. If done within the same calendar year, the effects would be netted out to the loss.
Technically speaking the sell from going from 50 to 150, and the sell going from 150 to 25 are separate taxable events. The timing of when each happens dictates what will be due, if any, and when. Everything is netted on your tax return filing.
You can offset your capital gains with capital losses.
For your scenario, if you have a $100 capital gain, and a $125 capital loss, you have nothing to pay taxes on.
You can even save that last $25 of capital loss for next year, and offset $25 worth of capital gains next year.
You may need to pay estimated taxes if you have a net capital gain. Make that decision straight from info on [irs.gov](https://irs.gov). Here is the form:
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