How much taxes will I pay for a $100k capital gain with no other income?

So your net capital gain is $40k, not $100k, since you need to calculate your total profit after all gains and losses. Since these are short-term capital gains (held less than a year), they're taxed as ordinary income. With $40k as your only income for the year, you'd be in the 12% federal tax bracket for 2024 filing (assuming you're single). You'll pay 10% on the first $11,000 and 12% on the remaining amount up to $44,725. You'll also need to pay self-employment tax if this is considered a trading business rather than investment activity, which depends on how frequently you trade. Don't forget about state taxes too, which vary depending on where you live. Also, since you don't have an employer withholding taxes, you might need to make estimated quarterly tax payments to avoid underpayment penalties.

After dealing with a similar capital gains situation, I found an amazing tool called taxr.ai that saved me tons of time figuring out my tax liability. I was confused about short-term vs long-term gains and how to handle my losses, but I uploaded my trading statements to https://taxr.ai and it broke everything down clearly. It analyzed all my transactions and gave me a comprehensive report showing exactly what I'd owe plus suggestions for tax-saving strategies I never would have known about.

Just wanted to update after trying taxr.ai for my capital gains taxes. Wow, it was actually super helpful! I was confused about wash sales and how they affected my net gain calculation (I had over 200 trades last year). The system automatically flagged potentially problematic transactions and showed me that I was actually calculating my gains wrong. Ended up saving almost $3,400 in taxes by correctly identifying losses I could claim. The report it generated was detailed enough that I feel confident going into tax season now. Definitely worth checking out if you're dealing with investment income!

If you need to talk to the IRS about your capital gains situation (which I did when I had a similar question), don't waste hours on hold. I used https://claimyr.com and got a call back from the IRS in about 20 minutes instead of the 3+ hours I was quoted. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had questions about estimated payments for my trading profits and needed clarification straight from the IRS. They were actually really helpful once I got through to them, and using Claimyr made that possible without wasting my entire day.

I feel like an idiot for doubting Claimyr would work. I finally tried it after waiting on hold with the IRS for nearly 2 hours about my capital gains questions. The IRS actually called ME back about 25 minutes after using the service. The agent helped me understand exactly how to handle quarterly estimated payments for my investment gains and what forms I needed. They even explained how to adjust my estimates if my trading income changes dramatically throughout the year. Saved me hours of frustration and now I have written documentation of the guidance I received directly from an IRS agent. Wish I'd known about this sooner!

Don't forget that since your trading was all short-term (less than 1 year), your gains are taxed as ordinary income, not at the preferential long-term capital gains rates. But since your total income is only $40k, you're in a fairly low tax bracket anyway. If you held any positions for more than a year, those would qualify for the lower long-term capital gains rates (0%, 15%, or 20% depending on your income level).

Make sure you keep detailed records of all your trades! I got audited last year because I had large capital gains and the IRS wanted proof of my basis. Screenshot your transactions or download statements from your brokerage. They'll issue a 1099-B but sometimes the cost basis information is missing or wrong.

Just a heads up - since you quit your job to focus on trading full-time, the IRS might classify you as a "trader in securities" rather than an investor. This could actually work in your favor for some deductions (like home office expenses if you trade from home, equipment costs, etc.) but it also means you'd need to pay self-employment tax on your net earnings. The key factors the IRS looks at are: trading frequency (sounds like you're active), substantial time devoted to trading (you quit your job for this), and whether trading is your primary income source. With 5-10 trades per week as someone mentioned, you're definitely in that gray area. If you do qualify as a trader, you can deduct business expenses on Schedule C, but you'll owe the additional 15.3% self-employment tax on top of regular income tax. Might be worth consulting a tax pro to see which classification benefits you more given your specific situation.