Taxes question

[LN1_Casey]

This is a really newbie question, but when do you pay taxes on stocks' gains? Is it immediately upon the sale, or is it when you file taxes at the new year? So, theoretically, you could sell 1/2 of your stock in November, then sell more in the following January to pay the taxes owed from the first batch?

 

[dmvevguy]

When you file taxes...either at short term or long term capital gains tax seperate from your taxable income.

 

[HAF-VA]

A bit more detail here. I’m also assuming you are in the US. You report the gain on your income tax return for the year you sell it. So if you sell the stock this year, it will be reported on your 2020 tax return filed in the spring of 2021. That said, if the gain is large enough, you may be required to pay the estimated taxes on the gain in the quarter you sell the stock. There are penalties for not having enough taxes withheld or paying estimated taxes to cover your tax burden. There are also safe harbor provisions where based on your prior year taxes paid, you may not have to pay the estimated taxes. If the gain number is large, I’d spend a little time looking at the safe harbor provisions or contact an accountant.