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How much tax will I have to pay if I put my money into stocks/funds?

  • Give me an estimate. Lets say I put 60k in a mutual fund and I get 2-3k over a period of time. I decide to sell some of the shares and take that as profit. Is the gov going to collect 50% of that or what? Example of real life experience appreciated, especially if it's in a fund.

  • Answer:

    It depends on how long you have held the stock and and your tax bracket. If you have held it more than one year you pay nothing if you are in the 10 or 15 percent tax bracket, and 15 percent in all higher tax brackets. If you have held it less than a year you pay taxes at whatever tax bracket you are in. One disadvantage of funds is you have no control over when they sell. Capital gains are usually distributed to fund shareholders at the end of the year and you have to pay taxes on them accordingly. Its also one reason not to put a lot of money in a fund at the end of the year. You just get part of it back and its taxable.

Rick at Yahoo! Answers Visit the source

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Mutual funds are just a pool of stocks, bonds, mortgages or other securities. You as an investor own a small percentage of this pool. If the underlying assets generate dividends and interest you get a share of that income periodically. You need to pay tax on that income as either interest or dividend income. On $60,000 you are not talking about very much money. The $60,000 is your basis in the fund plus any reinvested income. The fund will increase or decrease in value over time based on the market value of the underlying securities. When you sell the fund you will either have a capital gain or loss which is the difference in your basis and the amount the fund is sold for. That is either a capital gain or loss.

Steve

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