The brokerage industry added over 10 million new retail accounts in 2020, a record year, according to analyst Devin Ryan of JMP Securities.
A large number of these were taxable accounts. Robinhood Markets Inc., which brought a flood of first-time traders into the markets both last year and during this year’s GameStop frenzy, doesn’t allow customers to trade within retirement plans such as Roth IRAs and 401(k)s, where sales aren’t taxable.
What I learn, when I passed my Series 65 regarding capital gains, that long-term (investors) and short-term (gig gains) gains are not equally treated by IRS…
There are many offsetting rules but usually, the common Robinhooders will never think about these.
Taxpayers who hold investments longer than a year before they sell are eligible for favorable tax rates of up to 23.8% on their profits, known as capital gains.
Most day traders don’t qualify for these rates because they sell within a year, so their gains and losses are classified as short-term, and their net gains are taxed at the higher rates for ordinary income such as wages. These rates range max to 37%, plus a 3.8% surtax for higher earners…
Besides, the IRS will love WallStreetBets boasters putting their name, picture, and gains by million on the front page of their Facebook account…Besides