Taxes - Buying and Selling Stocks

[PennyPincher]

Okay, I'm a definite newbie in terms of stock investments ~ but I'm giving it a try with some money I saved up.

Here's my question for you more experienced folks... What type of tax am I obligated to pay if I buy stock and then sell it at a profit? And will that show on my statements from my brokerage, or is there more to be done on my end?

Any advice is appreciated. Thanks!

[terry1156]

You need to keep track of the amount you purchased the stock for so that when you sell, you know what the profit was. The brokerage will have this information, but it is a lot easier if you keep it someplace handy.

The amount you pay on the gains will depend how long you keep the stock. I believe there are two rates - long and short term. If you don't keep the stock a certain amount of time, it gets taxed on short term rates which is much higher than the long term rates.

This is all if you buy individual stocks yourself. If you buy a index fund, then all the information will come to you in a monthly and year end statement.

[gakline]

I have an account with a brokerage firm. I also didn't know much about stocks, so I went with mutual funds. They offer more diversity than with just one stock. The fund is managed by someone who's job is to make money. Also with going through the brokerage company, I have the option to buy individual stocks if I choose.