What's the difference between short-term and long-term capital gains?
Holding period is measured day-by-day from the day after purchase to the day of sale. One year or less is short-term and taxed at your ordinary federal income tax rate (10–37%). More than one year is long-term and taxed at preferential rates of 0%, 15%, or 20% depending on your taxable income. The IRS describes this split in Topic 409.
Are stock trading commissions deductible?
Commissions are not separately deductible as expenses, but they adjust your cost basis and proceeds. The buy commission is added to your cost basis and the sell commission reduces your proceeds, which lowers your taxable gain. Most brokers report net proceeds and adjusted basis on Form 1099-B, so they're already baked in.
What is a wash sale and how do I avoid one?
A wash sale occurs when you sell a security at a loss and buy substantially identical securities within 30 days before or after the sale (a 61-day window total). The loss is disallowed for the current tax year and added to the basis of the replacement shares. To preserve the deduction, wait 31 days before repurchasing or buy a different security that isn't substantially identical.
How do I calculate my stock profit?
Net profit = (Sell Price − Buy Price) × Number of Shares − Total Commissions. For example, 100 shares bought at $50 and sold at $75 with $10 total fees: (75 − 50) × 100 − 10 = $2,490 net profit. If you apply a 15% long-term capital gains rate, after-tax profit is $2,490 × (1 − 0.15) ≈ $2,116.50.
How are dividends taxed differently from stock sale profits?
Dividends are reported on Form 1099-DIV, not on this calculator. Qualified dividends (paid by US corporations on shares held more than 60 days during the 121-day window around the ex-dividend date) are taxed at the long-term capital gains rates of 0/15/20%. Ordinary (non-qualified) dividends and most REIT distributions are taxed at your ordinary income rate.
Do I report stock sales on Schedule D?
Yes. Sales are first detailed on Form 8949, which categorizes each lot as short-term or long-term and reconciles broker-reported basis. Totals flow to Schedule D, where short-term and long-term gains and losses are netted. Net capital losses up to $3,000 ($1,500 if married filing separately) can offset ordinary income, with the rest carrying forward indefinitely.
Does the wash-sale rule apply to cryptocurrency?
Under current IRS guidance, the wash-sale rule in IRC §1091 applies to 'stock or securities,' and the IRS treats cryptocurrency as property rather than a security. That means crypto losses are not currently subject to the 30-day wash-sale restriction. Proposed legislation has repeatedly sought to extend it to digital assets, so check the current rules before tax-loss harvesting crypto positions.
What if I sold at a loss?
Losses offset gains dollar-for-dollar within their holding-period category first (short-term losses against short-term gains, long-term against long-term). Excess net losses can offset ordinary income up to $3,000 per year ($1,500 if married filing separately). Anything beyond that carries forward to future tax years until used up.
Why is my profit different from what the calculator shows?
Common reasons: you forgot reinvested dividends in your basis, the broker used a different basis method (e.g., average cost instead of specific identification), wash-sale adjustments shifted the loss to a later lot, or you owe an extra 3.8% Net Investment Income Tax that the calculator does not include. Always reconcile with your year-end 1099-B.
What is cost basis and why does it matter?
Cost basis is the total amount you've invested in a position: purchase price plus buy commissions, adjusted for splits, reinvested dividends, and any wash-sale disallowances. It's subtracted from sale proceeds to compute your taxable gain. Brokers must report basis to the IRS for shares bought after 2010 ('covered shares'), but you're responsible for older lots.
