This confusion could take a bite out of your profits when tax time rolls around. An Enrolled Agent can help guide you through the complicated maze of selling and buying securities. Here are some general rules to remember.
Timing is everything.
Gains and losses on the sale of stock are categorized as having either long or short-term gains. This is important to remember when selling a stock because short-term gains are taxed as ordinary income, which could be as high as 39.6 percent. Long-term gains are taxed at a maximum of 20 percent. This is why it is so important to save purchase and sale confirmations, which show the date, price and expenses. Be careful not to run afoul of wash sale rules though.