Virtual Stock Exchange

[mrbaggio]

in the year you sell them or when you receive the dividends?

[WRXtranceformed]

You still pay tax on re-invested dividends.

Yerp. All of my dividends have always been reinvested. You pay tax on the dividends on a yearly basis. That's why it's important to save your fourth quarter stock statements you get in the mail... so you can give them to your tax guy. It's really annoying getting taxed while you hold stock and then again when you sell it. And if I'm remembering right, sometimes the longer you hold onto the stock (which usually means the more money you've made on it as the price has changed) the more heavily you're taxed (as opposed to cashing out a similar amount with a stock you've had for less time and that hasn't flucuated as much). That's where the basis comes in.

[mrbaggio]

For the most part the investments I hold do not pay (large) dividends. So it a real small amount.


I think you are talking about long and short term capital gains tax. You have it backwards. If you hold a stock for a year or longer you pay long term which is lower. Under a year and you are hit with short term tax

[WRXtranceformed]

I don't invest in stocks on a short term basis, so I can't speak to that. I can tell you though that you're taxed on the basis when you sell it, which is based on the value of the stock when you bought it versus how much it is worth when you sold it. That's what I was getting at by talking about stock that you've had for a longer time typically costing you more when you cash it out versus equivalent stock. At least that's how it was explained to me. I always just ponied up the check at the end of the year if I sold some stock. That along with the constant dividend taxing has weaned me away from long-term stock investments.

[mrbaggio]

That does not make sense. You don't want money because you will be taxed?

[WRXtranceformed]

That does not make sense. You don't want money because you will be taxed?

Of course I want money or I wouldn't invest, but I like to try to get it in ways in which my earnings are taxed the least, or not at all. If that doesn't make sense, I don't know what to say.