If I use the stock market account to purchase something?
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When I have stock traded in the stock market account. They all have a bank account number which to used for purchase. Is there a possibility that I will get income tax after purchasing using the stock market asset? Stock market from I been told will not tax me if I change before the dividend date and not withdraw. But if I were making a purchase on the stock market account, is that consider withdrawing? Will any of my asset be reported to the IRS? If I did or how will I know that it won't be reported when I am living on SSI which I can't make more than $800 a month. Any tax solutions? PayPal will not report to the IRS (see FAQs), if I make a purchase through PayPal which is a online bank system. Will I be income tax for that? Best solution for me as a disabled person who want to support myself where I don't need social security.
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Answer:
It's hard for me to figure out what exactly you are trying to ask, so if I'm on the wrong page with my response, please ignore. The checking account you have with a broker is a convenience account. If you have cash in your account, you can use the checks to buy anything you want. If you dont have the cash, many brokers will convert the check into a margin loan. But you only pay taxes on the difference between what you buy and sell a stock. Example: I own 100 shares of Apple Computer (AAPL) at a cost of $100. I sell them at $200. My profit (for tax purposes) is $100 ($200-$100) X 100 or $10,000 (if the stock was held for more than one year it is taxed at 15%, more if less than one year). The $10,000 is now in your account and you can buy anything you want, without any ADDITIONAL tax implications beyond the income taxes on the $10K profit. Same would be true if you had dividends. You pay the income tax when you report the dividends, any PURCHASES have no tax (other than potential state sales tax) implications. Likewise, what you BUY via PayPal has no tax implications. So, in any case yes, you are withdrawing funds. But you pay tax on the difference between what you paid for stock and what you sold it for, OR dividends (which is reported as income on your tax return) OR if it creates a margin loan. Hope that helps..
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