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Cách Trả Thuế Khi Bán Stocks | Cách Tránh Thuế Khi Đầu Tư | Cuộc Sống Mỹ | Đầu Tư Chứng Khoán Ở Mỹ - YouTube
Channel: Huyen Nguyen
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In this video, I will share with you how to pay tax when selling stocks
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and how to pay less taxes when investing.
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Hello everyone, welcome to my channel
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If this is your first time watching my video
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Then on this channel I will share all about finance, investment, and how to save money
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And I post the video every Friday afternoon
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If this is what you are interested in, please subscribe so we can meet every week
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Investing in stocks is a great way to build wealth and financial freedom
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But the important thing is
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we must be knowledgeable about the tax on stocks
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and how it will affect
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in your invested capital
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When you invest in stocks
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You have to pay tax on dividends and capital gains
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Dividends are a distribution of a portion of a company's earnings that it doesn't retain for business purposes
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based on each share that we own
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Captital gains are the profit we get after selling stocks
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For example, I bought 100 shares AT&T for $26/share
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then my capital is $2600
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If this year AT&T paid dividends of $2/share
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Then I will receive a total of $200 dividends from AT&T
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And if I sold all 100 shares AT&T for $29/share
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captial gains is $300
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that means the dividends I received are $200
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and captital gains at $ 300
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I will have to pay taxes on $200 dividends
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and pay taxes for $300 capital gains
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If I still keep that 100 shares
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Then this year I don't need to pay taxes for capital gains
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Because I have not sold my shares yet
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I just need to pay taxes on $200 dividends
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Tax rates you pay for dividends and capital gains
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will depend on a few different factors
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I will explain the tax rate of dividends first
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Dividends are divided into two categories
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Qualified Dividends and Non-Qualified Dividends
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If the dividends you receive are non-qualified
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the tax you pay will be the same as your income tax rate
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If this year you have to pay 20% income tax
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You also have to pay 20% of tax for non-qualified dividends
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And if the dividends you receive are qualified
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The tax rate will be lower
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It will be at 0%, 15%, or 20%, depending on your income
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What is difference between qualified dividends and non-qualified dividends?
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There are many different factors
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few examples of non-qualified dividends: dividends received from REITs
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dividends are received from tax-exempt companies
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or dividends received from foreign companies
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if you buy stocks of domestic companies, and keep long term
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The majority are qualified dividends
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This is a list of the tax rates you must pay for qualified dividends
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If your income is below $40k then you don't need to pay dividends tax
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If your income is from $40,001 to $441,550
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You must pay 15% tax of your qualified dividends
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if your income is $441,551 or more
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Then you must pay 20% tax of your qualified dividends
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If I file tax as single
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And this year the dividends I received from AT&T is $200
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if my income is under $40k
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I don't need to pay tax on the dividends received
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If my income is from $40,001 to $441,550
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The dividends tax I have to pay this year is $ 30
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and if my income is $441,551 or more
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The dividends tax I have to pay this year is $40
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Each year, your broker will send you a 1099-DIV form
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On this form, they'll list out the dividends you received for the year
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And will tell you the dividends you receive are qualified or non-qualified
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You will use the data on this form to file your tax return
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If you reinvest your dividends
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you still have to pay taxes on those dividends
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Next, we will talk about capital gains taxes
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Capital gains will also come in two types: short-term and long-term
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Short-term capital gains result from selling capital assets owned for one year or less.
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Long-term capital gains result from selling capital assets owned for more than one year.
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For example, I bought 100 shares AT&T in October for $26/share
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And now I sold all those 100 shares for $29/share
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Then I have a total profit of $300
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This $300 is short-term capital gains, because I keep AT&T for less than a year
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If I bought 100 shares AT&T in October for $26/share
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And I wait until November next year to sell
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The profits I get from selling AT&T will be long term capital gains
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because I kept AT&T for more than a year
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Tax rates you pay for short-term capital gains
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will be equal to your income tax rate
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For example, each year you pay income tax at the rate of 20%.
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Then you also have to pay 20% for short-term capital gains
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And taxes of long-term capital gains
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It will be 0%, 15, or 20%, depending on your income
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If your income is below $40k
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Then you won't have to pay taxes for long-term capital gains
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If your income is from $40,001 to $441,550
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then you have to pay 15% tax for long-term capital gains
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If your income is from $441,551 or more
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Then you have to pay 20% tax for long-term capital gains
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For example, I bought AT&T and I kept it for over a year before selling it
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and my profit is $300
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then if my income is below $40k
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I will not have to pay taxes on those long-term capital gains
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If my income is from $40,001 to $441,550
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I will have to pay $45 in tax
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If your income is from $441,551 or more
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I will have to pay $60 in tax
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For example, I bought 100 shares AT&T for $26/share
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and I keep more than 1 year
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then the dividends I get is $200/year
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and after 1 year I sold for $29/share
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capital gains are $300
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That means I profit $500 from buying and selling AT&T in 1 year
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if my income is under $40k
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I won't have to pay taxes
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If my income is from $40,001 to $441,550
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I will have to pay $75 tax in total
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if my income is from $441,551 and up
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I will have to pay $100 tax in total
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If you lose money this year
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then you can deduct up to $3000 when filing tax
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For example, if your income this year is $30,000
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then you can subtract $3000, and pay taxes on the remaining $27,000
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Please note one thing
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What I'm sharing is only based on personal understanding
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These are general information only
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Each individual will have a different economic situation, and different circumstances
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So you should only use this information for reference
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I am not an accountant
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So there will be special cases that I won't have the expertise to answer
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How to pay less tax when investing?
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The first way is to invest long term
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You can see it too
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For long term investment, we save a lot of tax
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compared to short term investment
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The second way is to invest in tax-benefit accounts first
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Examples are IRA, 401k, HSA, 529
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When you invest in a taxable brokerage account
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You have to pay taxes times
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The amount that you use to put into the brokerage account to invest
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is the money you have already paid taxes
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For example you have $ 5000 in the bank to invest
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is the money that come from your paycheck
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It's not that you can make $5000, they pay you $5000
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To get the $5000 paycheck you have to make more than $5000
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they deduct the tax and then they give you $5000
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That means the money that you have to invest is already taxed
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When you use this money to invest
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if you receive dividends, you have to pay taxes
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Then when you sell stocks for a profit, you also have to pay tax
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That means with a taxable brokerage account
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Your contributions are taxed
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dividends are taxed, and capital gains are taxed, which means you have to pay taxes 3 times.
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But with account Roth IRA
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You only pay tax on your contributions
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No dividends tax, and no capital gains tax
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With Traditional IRA or 401k
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No tax on contributions, no tax on dividends,
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but you have to pay tax when withdrawing money
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With HSA
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No tax on contributions, no tax on dividends, and no tax on capital gains
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As for 529, your contributions are taxed
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No dividends and no capital gains tax
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These accounts will have different terms
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Please do more research before contributing to these accounts
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If you want to learn more about Roth IRA accounts
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please watch these 2 videos
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And if you want to learn about Traditional IRA and 401k
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please watch these 2 videos
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And if you want to learn about 529 and HSA
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then watch these 2 videos
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I will put the links of these videos below the comments.
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Personally, every year I will max out 401k, Roth IRA, and HSA
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before I started investing in taxable brokerage accounts
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Do you have any of these accounts?
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Please let me know in the comment below.
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Thank you for watching. Don't forget to like and subscribe. Bye.
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