Federal Taxes

Must I pay taxes on earnings from my investments?

If your investments are made using after-tax dollars, meaning they are not held within any retirement accounts, then you may be exposed to two types of taxes: a tax of up to 20% on any dividends distributed to you, and, if you buy and sell a stock, a capital gains tax of 20% on any profits made while you bought and sold the stock or investment. But if you hold the stock for less than one year, you may have to pay taxes on the gain as part of your ordinary income, which is usually higher than the 20% tax rate.


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