How and do I need to claim stocks?

Question

I am pretty sure I am going to make a few hundred bucks off of this stock I bought and want to sell soon. Do I need to claim the profit? Is there a limit? for example: anything over 600 needs to be claimed? What happens if I dont claim it what are my chances of getting audited? All other answers about stock and tax would be great. Thanks

Answer 1

Do I need to claim the profit? Yes, on Schedule D.  It also matters if it is a short or long term gain.  Is there a limit? No.  What happens if I dont claim it what are my chances of getting audited?  Over $600 and it is guarenteed that the broker will send a 1099 to the government (and you) on the transaction.   It that happens and you don't add it to your return, you'll very likely get audited.

If the transactions as a whole are over $600 you should get the 1099.  Doesn't matter if your profit is only $200, if you get $700 from the sale, they'll report it.  And that is a net total for the year. So two transactions that get you $300 in proceeds, put into your account each, still gets you.

Short Term gains are taxed at your ordinary income rate, while Long Term gains are taxed at lower rates.  You also fill out schedule D so that you can show the actual gain and only pay taxes on that.

Simply, if you get a 1099 you better include it, just like your W-2, because the IRS gets copies too.  They like to compare the two and make sure people aren't trying to cheat on their taxes.