Understanding U.S. Stock Taxes and Reporting Requirements

Investing in U.S. stocks requires reporting annual taxes; dividends and profits are subject to different tax rates based on holding periods and income levels.

### Understanding U.S. Stock Taxes: Reporting, Dividends, Capital Gains, and Strategies
* 💸 U.S. stock investments, whether through trading profits or dividends, need to be reported annually for tax purposes. The deadline for filing 2020 taxes is **July 15th**.
* 📈 Long-term individuals (hold for over a year) and short-term individuals (hold for less than a year) are taxed differently based on the **gains' holding period**.
* 🏦 Qualified dividends must be held for at least **60 days out of a total of 120 days** around the ex-dividend date to receive **preferential tax treatment**.
* 📊 Capital individual tax rates apply to profits from selling stocks after **one year** and dividends received after **60 days**.
* 📉 Net losses from stock trading can be deducted annually **up to $3,000**, with excess losses **carried forward**.
* 🚿 Wash Sale Rule prevents deducting losses if the **same stock is repurchased within 30 days before or after a sale**.
* 💰 Strategies like contributing to retirement accounts (e.g., **Traditional IRA**) and managing **dividend-paying stocks** can help reduce taxes.
* 📊 2020 tax brackets have **slightly increased** compared to 2019, so it's essential to understand how your income affects **tax rates**.

Hello, this is the U.S. Life Original Channel. Today, I am filming a video with the title Organizing Concepts Related to U.S. Stock Taxes in the U.S. In fact, among the subscribers to my channel, there have been many inquiries about taxes related to investing in U.S. stocks. For example, some wonder if taxes are calculated every time they sell or if they are aggregated over the year for the total profit. Some are curious about short-term and long-term capital gains, as well as how they compare to Korean securities doctors. There are also questions about how U.S. ETF taxes are paid, and it would be great to upload videos on overall tax-related topics. Additionally, there are inquiries about whether taxes need to be paid on dividends.

Of course, I replied to comments like this, but still, I feel like these curiosities will continue to grow. I thought it would be more helpful to gather and create a video, so I decided to film today. Before starting, I want to clarify that this video is for better understanding. Therefore, for detailed tax-related questions, it would be more helpful to ask a tax professional. In fact, I also connect my stock account through TurboTax to protect taxes every year, so I don't know everything well. I may not be able to answer very detailed questions in the comments, but to the best of my knowledge, I will try to answer. Korean tax law and U.S. tax law are different. In Korea, for example, I heard that there is a 15% withholding tax on dividends, and if the annual dividend income exceeds a certain amount, there is something related to comprehensive income taxation, and selling something requires a 22% tax payment, or something like that.

When investing in U.S. stocks in the U.S., whether it's through dividends or profits from trading, it should be reported annually for tax purposes. This year, the reporting deadline is July 15th. When investing in U.S. stocks from Korea, you should consider the exchange rate, and when investing in U.S. stocks within the U.S., it is beneficial to understand taxes. Let's start with the basics of tax reporting in the U.S. Just as I mentioned, the deadline for filing taxes for 2020 is until July 15th. You report income and losses related to taxes for the previous year from January 1st to December 31st. Therefore, some may ask, I started investing in stocks this year and received dividends for the first time. How do I pay taxes? How are taxes applied? If you receive dividends this year, you should report them when you do your total accounting for 2020 next year.

When selling or receiving dividends, you receive pre-tax amounts, both for long-term individuals and short-term individuals. Long-term individuals hold for more than a year and sell after holding for less than a year, dividing the gains into long-term and short-term based on the holding period. I will discuss Russia a bit later. Like stocks, dividends obtained through stocks also have qualified dividends and ordinary dividends. To become a qualified dividend, you must hold it for more than 60 days, but I will explain this part in more detail later. So, what you need to know here on this one page is simply that holding it for a long time is good from a tax payment perspective. Let's move on to Wonho. Here, I will explain.

And joint, which means married couples, and single tax brackets are brought. Your income is now between here or here, depending on where you are, the tax will differ. Usually, when you have more income, the tax for joint couples is about twice that of single individuals. In the case of the won-ho tour, you should judge where you are in terms of tax brackets, and realize that capital individuals pay much less tax than ordinary tax payers here. Ordinary tax rates are based on your monthly salary, annual income, bank interest, business profits, and profits from selling stocks within a year or receiving dividends within 60 days. Capital individual tax rates apply to profits from selling stocks after one year and dividends received after 60 days. Even in this era of zero interest rates, where banks receive interest by depositing money.

The interest rate itself is very low, and the interest received cannot be personal capital. This is because it is subject to general tax rates, so at this point, wouldn't it be better to receive stock dividends rather than bank interest? And as for REIT stocks, I will explain a bit more later. This is Jason Lee. In order to become a qualified dividend paid by a U.S. company or an eligible foreign company, in fact, this applies to most companies, so it's not that important. The second important point is the qualified dividend. In English, it's called an XDB dividend, and it must be held for at least 60 days out of a total of 120 days, with a dividend lock-up date of 61 days before and after. So, you need to own the stock for at least 60 days. This may be a bit confusing, so let me give you an example below. If you bought Microsoft on January 1st, and the dividend lock-up date is February 20th, and the dividend payment date is March 14th, then

I buy Japanese stocks and since last month was 60 days ago in March, the dividend payout for March 1st comes before 1st, so in this case, it becomes a Color Pied DB round. Even if you buy Microsoft stocks, if you buy them on February 1st, since 61 days after February 1st is April 1st, April 1st is after the dividend payout date, so in this case, the dividend received on March 14th becomes an Ordinary DB. Usually, when it comes to Color Pied DB, a 15% tax is applied, but Ordinary DB varies depending on your income environment. Also, for those who are curious about this part, when you receive dividends, you can either buy other stocks or automatically invest through a service called Dream Investment Play, and if you do this, do you still have to pay tax on it? This is what you may be curious about.

You may have dividends, but you must also pay taxes in the same way if you reinvest dividends. So, when you think about stocks, you should invest in stocks with the money you have already paid taxes on or with the money you need to pay taxes on, using the after-tax amount in the app. You should think of profits or dividends received as income for tax purposes. And dividends received from there should be considered as ordinary income. This is written as Income in the notes, but in fact, why is this the case? Rich is a real estate investment trust company. However, these companies do not pay income tax. It has been decided by the country that they do not pay income tax. Instead of paying income tax, they are allowed to return 90% of the profits to the shareholders so that shareholders can receive a lot of dividends. In return, shareholders are required to pay taxes as ordinary income according to the law.

If you buy stocks like real estate income, the dividends you receive from there and the amount you sell the stocks for when you exit, regardless of how long you hold them, should be considered as ordinary income. Now, let's talk about stop-loss orders. Here I wrote down 4 losses, the reason being that when we buy and sell stocks for a year, some stocks make a profit, so we sell them, and some stocks make a loss, so we sell them. When all of that adds up to a loss, we call it a net loss. Up to $3,000 of this can be deducted annually, and if the loss is over $3,000, it can be carried over to the next year for deduction. And net losses from easy returns are deductible for up to 4 long-term gains. I will explain this further with practical examples on the next page. Let's say person A sold Apple stocks in late 2019, which they bought in early 2019, making a profit of $3,000.

In the same year, let's assume that person A bought and sold stocks, resulting in a profit of $7,000. Then, in 2019, the net income for person A would be -$4,000 because $3,000 of the $7,000 profit was used to cover losses. So, the deductible amount for taxes in 2019 for person A would be $3,000. Therefore, after deducting this amount, in 2020, additional deductions are possible. Of course, in 2020, by buying and selling stocks, there will be profits and losses. Initially, the deductible amount can be entered as $0. Person B, under the same conditions as person A, sold Apple stocks for a profit and incurred losses by selling Boeing stocks. Additionally, they bought Facebook stocks in 2017 and sold them in 2019, resulting in a profit. So, in person B's 2019 tax term, just like person A, it would be -$4,000. However, person B's 2019 net term would be $1,000 because in 2017,

Since you bought it, whether you buy it in January or December without a profit, since you have owned it for more than a year, it becomes a long-term gain, and because the initial profit is low, it has already reached four, so the deductible amount for 2019 is 3,000 or more. This is the same as 'A,' but when you sell Facebook at this time, you do not need to report taxes on the profit you made. That's what I just mentioned. However, long-term gains are deductible for individuals. This is what it means. When buying and selling stocks, there is something you must know. That is called Wash Sale Rule. This is when you buy the same stock within 30 days before or after selling it at a loss. Why was this created? It was created to prevent people from taking tax benefits through loss reporting. Due to this Wash Sale Rule, losses incurred are not separately deductible.

But you know, there are cases like this. What if you sold it and the price dropped, but you want to buy it again? Let me give you an example. A person named A buys a Boeing share for $350 in February 2018. Then, about two years later, in March 2020, A sells the Boeing share for $100 because the price keeps dropping. However, ten days later, the price drops to about $100 per share. Wow, it has really dropped a lot. Should I buy it again? The price is too good to ignore, but at the same time, it's too risky to just pass by. I want to buy it again. So, in this case, the wash sale rule applies. Also, although it's a bit hopeful, let's assume that in December 2020, Boeing is selling a share for $300. In this case,

Based on 200 roots, not 359 times, but as 200 roots, when I sold one week of 300 horns, I tried to use 100 root taxes, and it became a long-term tax, and in a big picture, I made a profit of 350 dollars by selling 300 horns, so I made a profit of 50 dollars, but I have to pay taxes for 100 horns. So, as this goes deeper, it gets quite complicated, and in fact, we don't make buying and selling as simple as this, there are various factors. Therefore, if possible, after selling, it's better not to touch it within a month and you can buy other stocks. How about that? So far, we've looked at from the origin to Warner 3, but even if you know this much, you can draw a big picture, grasp the feeling, and think. However, in the future, I will give you practical examples, and if you encounter a situation similar to yours, I will be able to help you a little more.

I will move on to the next one. Here, it's a case of two people. In fact, I will give an example. I will give an example through 10 people, and I will give an example through one person. I brought my 2019 single text kit to make it easier to give an example. Let's start from A. Here are the people from A to E. Throughout the year 2019, from A to E, their partners earned $80,000 in income and bought Amazon stocks, which increased by $5,000. At this point, person A, with an income of $85,000, didn't add the two amounts ($85,000) together, but only the $80,000. This is because they haven't sold Amazon yet, and they just have the $5,000 increase. Therefore, it doesn't include the tax burden. With an income of $80,000, they will pay 22% tax because they have the $22,000 here. Person B also had an income of $80,000, but unlike A, they sold the Amazon stock they had, making a profit of $5,000. In this case, including the tax burden and the $85,000, ...

Here, when you hold a bracket, you have to pay 24% in tax. Person C also received $3,000 in long-term dividends with an income of $28,000. In this case, you would pay 22% in tax and 15% on the $3,000 applicable to long-term dividends. Do you have a sense of it? Here, you can see that different taxes are applied to long-term dividends. Now, let's assume that person D receives the same conditions as C plus rich dividends. In this case, with a total of ordinary income of $80,000 plus the dividends, making it $90,000, you would have to pay 24% in tax. Similarly, Norton dividends are subject to a 15% tax. A person who earns $88,000 in income, suffers an $8,000 loss in stock trading. In that year, the taxable income would be $83,000 instead of $83,000, as only the $3,000 loss would be deducted.

The tax on Lincoln is 85k, which is 85,000 dollars, and because it is under the tax bracket of 85,000, you have to pay a 24% tax. So far, I have seen 5 people, and I will see 5 more. Person F earns 80k a year. For example, his father gave him a large amount of money 10 years ago and told him to try investing in stocks. At that time, the stocks he bought 10 years ago increased by 90,000 dollars, so he sold them. In this case, a 24% tax is applied. In such cases, in addition to the 80k and 90k, the ordinary tax bracket is not only 170k but also for the stocks bought 10 years ago, which are long-term capital gains, so for up to 90k, which is 90,000 dollars, a 15% tax is paid, and for over 80k, a 24% tax is paid. Person J earned a thousand dollars more than F and sold long-held stocks for almost the same amount, making a profit of 80,000 dollars.

In this case, you should pay 32% tax because you bought stocks this year and sold them this year, resulting in a total of 81k + 80k, making your ordinary income 261k. Then, 32% will go into the Pounder Lee. Here, person H, with a similar taste, also received 81k in income and sold stocks this year. They did almost the same thing, exactly the same. A close friend saw a rat and thought, Oh, this friend got hit with a 32% tax. I shouldn't do that, so H, with a different drinking capacity, saves 3 attachments of a retirement pension of 81k. Therefore, in this case, despite the 81k + 80k resulting in ordinary income of 1,106,161k, due to the inclusion of 3 attachments of the Pretty XMP pension info, ordinary income is eliminated, becoming 18k. Hence, since it falls into the bracket here, you will pay 24% in taxes.

J demonstrated that unlike G, it is possible to significantly reduce taxes by utilizing retirement pensions. In the case of this individual, who earns $44,000 in income per year but is not supported by the company in terms of retirement pensions, they decided to contribute $5,000 to an IRA, which stands for Individual Retirement Account. Here, it says T, which means Traditional IRA. Just like Roth IRA, it is a pre-tax account. Even though I earned $44,000 in income, by putting $5,000 into a Traditional IRA, my ordinary taxable income becomes $39,000. In this case, it can be seen that taxes will decrease by 10%. J and I receive the same monthly salary, and like J, I also contribute $5,000 to a retirement pension. However, I am investing in REITs.

I forgot that I have a lot of stocks, so I received a rich dividend statement. Now, for those who work, you must pay a 22% tax. This is because, as I mentioned earlier, rich dividends are classified as ordinary income. At the moment this happens, ordinary tax withholding is completed, and when it reaches $40,000, you must pay a 22% tax. I will conclude the video. I have organized various concepts related to taxes. For example, in some cases, a certain percentage of tax applies, and in other cases, it is considered as long-term individual, resulting in different tax applications. I gave examples like this, but in reality, it is not as simple as it sounds. It can be quite complex, and tracking each detail seems challenging. So, although I made this video, I suggest you keep it for study purposes and understand that it is quite intricate.

You don't have to worry about this, but if you do something like what I mentioned, for example, if you withdraw around $40,000 or $85,000, then you can consider investing a bit more in retirement pensions or selling dividend-paying stocks to buy stocks that do not pay dividends. By doing so, you can reduce your taxes. I wanted to mention this to all of you. Lastly, I will divide the 2020 tax brackets. Compared to 2019, it has slightly increased from $39,000 to $85,000. There isn't much significant change, so while investing in stocks and receiving dividends, you should see how much your income is and whether it falls into the lower tax bracket by looking at both your and your spouse's income.

I think you might be able to see how much capital individuals can make when they sell and profit if they don't receive dividends like this. You don't need to remember all the content, but if you watch this video and forget later, you can review each point and realize, Oh, this is what happens in such cases. By reviewing, you might be able to utilize the video a bit more. That's it for today's video. Thank you to those who watched. Have a great day.

미국에서 미국주식 - 세금관련 개념정리 & 실전 팁!

미국에 살면서 가장 기본적인 재정관리의 팁부터 어떻게 하면 우리가 좀 더 효율적으로 저축/투자를 할 수 있을까, 어떻게 하면 오늘 나의 재정상태를 바로 알고 내일을 준비하며 바른 습관을 쌓아갈 수 있을까에 중점이 실린 채널입니다!

문의: uslifeoneoone@gmail.com

미국생활101 TV

stock investments are a common concern among subscribers.

The deadline for reporting 2020 income and losses related to taxes is July 15th, with dividends and profits from trading needing to be reported annually.

Long-term and short-term capital gains, as well as qualified and ordinary dividends, all have different tax implications for investors.

Tax Brackets, Stock Dividends, and Investment Taxes

Married and single tax brackets determine different tax rates based on income levels.

Capital individuals pay less tax than ordinary taxpayers, making stock dividends a potentially better investment than bank interest.

Receiving dividends or reinvesting them both require the payment of taxes, as they are considered ordinary income.

Real Estate Investment Trust (REIT) companies are not subject to income tax, allowing them to provide high dividends to shareholders who are then taxed on their income.

Understanding Stock Income, Losses, and Deductions

Stock dividends and selling profits are considered ordinary income, while net stock losses can be deducted annually up to $3,000 and carried over to the next year.

Net losses from stock returns are deductible for up to 4 long-term gains, and the Wash Sale Rule prevents the separate deduction of losses.

The rule also applies when buying the same stock within 30 days before or after selling it at a loss, aiming to prevent tax benefits through loss reporting.

Confusing Stock Trading Scenarios in 2019

A person made a $50 profit from selling 300 horns but had to pay taxes for 100 horns, making the situation complicated.

The advice is to avoid touching the money after selling for a month and consider investing in other stocks.

Different tax rates apply to long-term dividends, as shown in examples from persons A to D, making the process of calculating taxes more complex.

Taxation on Income and Stock Sales: A Financial Analysis

- Income from both salary and stock sales is subject to different tax brackets, with long-term capital gains taxed at 15% and ordinary income taxed at 24-32%.

- Utilizing retirement pensions can significantly reduce taxes on ordinary income, as demonstrated by individual J, who managed to lower their tax rate from 32% to 24%.

- Contributing to a Traditional IRA can decrease taxable income and potentially lower taxes by 10%, as seen in the case of an individual making a $5,000 contribution to the account.

Rich dividends are subject to a 22% tax as ordinary income, with tax withholding occurring at $40,000.

Diversifying investments into non-dividend paying stocks or retirement pensions can help reduce taxes.

The 2020 tax brackets show a slight increase, emphasizing the importance of understanding how investment income impacts tax obligations.