OT - Anyone here good with stocks?

[roxysmum123]

Hi

I have some stocks from a company I used to work for. They've grown to a point where I feel I've more than made my investment back and I'd like to cash them in. I'm just wondering if anyone here knows what happens for me tax-wise once I do so? Do I pay taxes right out on it, or do they calculate if I owe anything when I do my taxes next year?

Also, when I sell my stocks, do I get a cheque for what they were sold as, or is it direct deposit? They're being held/brokered/whatever you want to call it by the Scotiabank iTrade if that makes a difference?


Thanks

 

[Northstar]

Well, I'm not good with stocks as far as picking the right ones and getting rich, but I might know the answers to your questions!

Usually, when you sell stocks, there's no money held back for taxes. You have to know how much you paid when you first bought the stocks, and how much you received when you sold them. The profit is taxed as capital gains. The part of the money that is just a return of what you paid for the stocks doesn't get taxed. You will have to fill in Schedule 3 Capital Gains for your 2012 tax return.

For federal tax, you won't owe more than 29% (top tax rate) divided by 2 (because only 50% of your capital gains are taxed) of the profit you made. But you'll also have to figure your provincial tax on it. The key thing is to figure out in advance roughly what you'll owe, and (if you're like me) send that money to CRA before you spend it!

About how you'll receive the money from the sale... that depends on your broker/financial institution. Normally, you can include in the instructions for the sale how you want to get the money. Ask when you contact them to arrange for the sale.

 

[redrosesix]

Well, I'm not good with stocks as far as picking the right ones and getting rich, but I might know the answers to your questions!

Usually, when you sell stocks, there's no money held back for taxes. You have to know how much you paid when you first bought the stocks, and how much you received when you sold them. The profit is taxed as capital gains. The part of the money that is just a return of what you paid for the stocks doesn't get taxed. You will have to fill in Schedule 3 Capital Gains for your 2012 tax return.

For federal tax, you won't owe more than 29% (top tax rate) divided by 2 (because only 50% of your capital gains are taxed) of the profit you made. But you'll also have to figure your provincial tax on it. The key thing is to figure out in advance roughly what you'll owe, and (if you're like me) send that money to CRA before you spend it!

About how you'll receive the money from the sale... that depends on your broker/financial institution. Normally, you can include in the instructions for the sale how you want to get the money. Ask when you contact them to arrange for the sale.

I agree with this. And most brokerage accounts the money goes into your account unless you tell them to deposit it to your bank account, which I assume you have linked to your brokerage account.

 

[roxysmum123]

Ok, I don't really KNOW how much I bought them for as it was part of an employee stock plan and was deducted from my payroll.... it should be on some of the documentation I've gotten somewhere though right?

And is the money I'm taxed on factored into my regular income tax? Eg is it possible that I won't have to pay taxes on it due to a low income this year from being a fulltime student and being on greatly reduced work schedules?

It all sounded like a good idea, but now that it's time to sell it's making me go cross-eyed, lol. I don't understand money.

 

[redrosesix]

Ok, I don't really KNOW how much I bought them for as it was part of an employee stock plan and was deducted from my payroll.... it should be on some of the documentation I've gotten somewhere though right?

And is the money I'm taxed on factored into my regular income tax? Eg is it possible that I won't have to pay taxes on it due to a low income this year from being a fulltime student and being on greatly reduced work schedules?

It all sounded like a good idea, but now that it's time to sell it's making me go cross-eyed, lol. I don't understand money.

you should check your brokerage account and see if they have a book value ie the value when you got them, posted for that stock. Otherwise you'll need to figure that out when you do your taxes.

And yes, you'll be including this with your employment income to determine your total taxable income ie. you may not have to pay any or much income tax at all on the gains.

Stocks do go up AND down. I take profits all the time, and sometimes losses -- I don't think selling is ever a bad thing because it allows you to do other things with your money (including making even better profits elsewhere). My dad always used to tell me that if I didn't know what to do, I should sell half of the stocks and decide on the rest later.

 

[roxysmum123]

My dad always used to tell me that if I didn't know what to do, I should sell half of the stocks and decide on the rest later.

That's very wise! From my best guess, I've more than doubled my investment (I bought when it was in the low $20's less the employee discount on purchasing) and it's sitting in the mid-$50s now. I wanted to use them to pay for a Disney vacation, and that was my intention when I purchased and I now have more than enough to do so so I really want to sell but again scared that if I do they'll keep going up.... greed is a powerful thing I guess! I think maybe I will just do half, which will be enough for spending money and extras and probably an upgrade on my upcoming trip and let the rest of them sit and fester and hopefully grow a little more.

Thanks for all your advice, it's much less scary approaching foreign territory when you have some Dis-ers to guide you!

 

[Polydweller]

As suggested you must get the book value, the amount per share you paid. Then when sold the difference is the capital gain. You must calculate this and include as income in you taxes next year when you do your taxes in 2013. It's income for 2012. So remember to keep enough to pay that extra tax in April 2013.

 

[maryliz]

And any FEE that you pay your broker to cash them in is also deducted from the amount that you will pay capital gains on. Doesn't usually amount to much but I prefer to NOT give the government any more $$$$ than I really have to.

 

[roxysmum123]

And any FEE that you pay your broker to cash them in is also deducted from the amount that you will pay capital gains on. Doesn't usually amount to much but I prefer to NOT give the government any more $$$$ than I really have to.

Good call! Didn't think of that!