Taxes on stocks and dividend reinvestment plans

#1 04-16-2007, 05:46 PM

On Apr 16, 9:29 am, "AsymF" <fearful.asymme...[at]gmail.com> wrote:
- quote -

> I am fairly green when it comes to an understanding of taxes with
> stock ownership and I am wondering if someone here can answer these
> simple questions for me.
> If I own a stock and it doubles in value by the end of the tax year
> but I don't sell the stock, do I still have to pay taxes on the value
> gained on the stock that very year or do I only have to pay taxes on
> it the year that I actually sell the stock if I make a profit off the
> sell?

Only when you sell.

- quote -

> If I have a dividend reinvestment plan setup with my brokerage firm do
> I need to pay taxes on those dividend disbursements at the end of that
> year or only after I sell the stocks? At some other point?

Tax on dividends are paid every year.

- quote -

> Thanks for your help!

04-16-2007, 04:33 PM

"AsymF" <fearful.asymmetry[at]gmail.com> wrote in message
news:1176739839.902890.203640[at]b75g2000hsg.googlegroups.com...

- quote -

> If I own a stock and it doubles in value by the end of the tax year
> but I don't sell the stock, do I still have to pay taxes on the value
> gained on the stock that very year or do I only have to pay taxes on
> it the year that I actually sell the stock if I make a profit off the
> sell?

You pay taxes on the stock you sell in the year you sell it. The amount on
which you are taxed is the difference between the sales price and the "cost
basis" for that stock, which is the amount you paid for it.

- quote -

> If I have a dividend reinvestment plan setup with my brokerage firm do
> I need to pay taxes on those dividend disbursements at the end of that
> year or only after I sell the stocks? At some other point?

Each dividend is taxable when you receive it. If you use that dividend to
buy more stock, it's just as if you used cash to buy the same amount of
stock.

#-1 04-16-2007, 04:29 PM

I am fairly green when it comes to an understanding of taxes with
stock ownership and I am wondering if someone here can answer these
simple questions for me.

If I own a stock and it doubles in value by the end of the tax year
but I don't sell the stock, do I still have to pay taxes on the value
gained on the stock that very year or do I only have to pay taxes on
it the year that I actually sell the stock if I make a profit off the
sell?

If I have a dividend reinvestment plan setup with my brokerage firm do
I need to pay taxes on those dividend disbursements at the end of that
year or only after I sell the stocks? At some other point?

Thanks for your help!

Similar Threads
Thread	Forum	Replies	Last Post
Inputting a Dividend Reinvestment Kyle: Ok I have about 15 years' worth of activity in one of my investment accounts. Most of it is just reinvestment of dividends. I went to input my...	Microsoft Money	3	03-01-2006 07:15 PM
Dividend Reinvestment - Am I recording this correctly? unique display name: I receive multiple dividend reinvestment statements. Over the years, i have recorded each of these statements into my portfolio by ONLY entering...	Microsoft Money	14	07-31-2005 09:38 PM
Dividend and Interest Reinvestment glenwcan: I have stocks that I manually enter the dividends for each month. I also have bonds that I manually enter the interest payments for each month. ...	Microsoft Money	1	05-11-2005 03:06 AM
Dividend Reinvestment Plan Fee John Beurket: For years I have been using Quicken to account for investments, and until I updated to the 2005 version the fees that I have entered for stock...	Taxes	1	02-17-2005 12:52 AM
Dividend Reinvestment jplasater@NOSPAMjuno.com: Is there some way to have Delux Portfolio automatical detect dividends to mutual funds and reinvest them in new shares. My portfolio is mutuals...	Microsoft Money	6	06-24-2004 11:52 PM

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode