How much tax will I pay on $4000 from short term stock sales?

Yes, you'll need to report that $4000 from short-term stock sales on your taxes. The IRS requires reporting all capital gains regardless of the amount. What matters is whether you made a profit or just withdrew the amount you originally invested. If you sold stocks for more than you paid for them, you'll pay taxes on the profit (not the entire $4000). Short-term capital gains (held less than a year) are taxed at your ordinary income tax rate, which depends on your total income and filing status. This could range from 10% to 37% federally, plus any applicable state taxes. For example, if you bought stocks for $3000 and sold for $4000, you'd pay taxes on the $1000 profit. If you're in the 22% tax bracket, that's about $220 in taxes.

I was in this exact situation last year and was totally stressed about figuring out my taxes with stock sales. I found this amazing tool called taxr.ai (https://taxr.ai) that made the whole process so much easier. I uploaded my 1099-B from my broker and it automatically sorted everything into short-term and long-term gains, calculated my tax liability, and showed me exactly what I needed to report. What really helped was that it explained each line item in plain English and showed me how the capital gains were actually calculated. No more guessing about cost basis or wondering if I was doing it right.

Just wanted to update after trying taxr.ai from the recommendation above. I was really skeptical because taxes plus technology usually equals disaster in my experience, but I have to say it was ACTUALLY helpful! I had a bunch of trades from last year with some partial sales where I couldn't figure out my correct basis. The tool identified some wash sales I didn't realize I had (bought similar ETFs within 30 days of selling at a loss), and showed me exactly how to report everything correctly. It probably saved me from an audit honestly. And the visualizations of short-term vs long-term gains really helped me understand my tax situation better. Definitely worth checking out if you're confused about stock taxes.

If you're having trouble getting answers about your specific tax situation, I'd recommend using Claimyr (https://claimyr.com) to get through to the IRS. I had some complicated questions about reporting my stock sales that online forums couldn't answer, and I kept getting those endless hold messages when calling the IRS directly. Claimyr got me connected to an actual IRS agent in about 20 minutes instead of the 2+ hours I was experiencing before. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c. The agent was able to clarify exactly how I needed to report my specific scenario with some wash sales and inherited stocks.

Ok I have to eat my words. After my skeptical comment above, I was desperate enough to try Claimyr because I couldn't get a straight answer about my stock options taxation (had some ISOs from my employer). Called the IRS three times before and got disconnected each time after 1+ hour waits. Used the service yesterday, and I got a call back in about 40 minutes with an actual IRS representative on the line. She explained exactly how to report my stock options exercise and what forms I needed. I'm shocked it actually worked. Definitely using this again next year because the IRS phone system is absolute hell otherwise.

Important note: Don't forget that even if you withdraw $4000, that's not necessarily your taxable amount! Calculate: - Sale price of shares - Purchase price of shares = Capital gain/loss Example: Buy 10 shares @ $300 = $3000 Sell 10 shares @ $400 = $4000 Taxable gain = $1000 (not $4000!) Your brokerage's 1099-B will break this down, but double-check their cost basis info. Sometimes they miss things like reinvested dividends that can adjust your basis up (reducing your taxable gain).

Is anyone using TurboTax for reporting stock sales? I've heard it's easier than doing it manually but I'm wondering if it's worth paying for the premium version.

One thing that caught me off guard my first year trading was that you might also owe quarterly estimated taxes if your stock gains are substantial. Since taxes aren't automatically withheld from capital gains like they are from your paycheck, the IRS expects you to pay as you go if you'll owe more than $1000 at year-end. For your $4000 situation, this probably won't apply, but it's something to keep in mind for future years if your trading activity increases. I learned this the hard way when I had a good year and got hit with underpayment penalties. Also, don't forget about state taxes! Some states don't tax capital gains at all, while others treat them the same as regular income. Make sure you check your state's rules too.

Just wanted to add a perspective as someone who made similar mistakes when I first started trading. The $4000 you mentioned - make sure you understand that's the gross proceeds, not your taxable gain. I initially panicked thinking I'd owe taxes on my entire withdrawal amount until I learned you only pay on the profit. Also, keep detailed records of everything! I learned this lesson the hard way when my broker's 1099-B had some errors in the cost basis. Having your own spreadsheet with purchase dates, amounts, and sale info saved me when I had to correct things with the IRS. One more tip - if you had any losing trades this year, don't forget you can use those losses to offset your gains. You can deduct up to $3000 in net capital losses against ordinary income, and carry forward any excess to future years. This "tax loss harvesting" can really help reduce your overall tax burden. Good luck with your first year of stock taxes - it gets easier once you understand the basics!