If you sell stocks…..even those owned in a mutual fund….you need some extra info. And that info isn’t always on your brokerage statement. You need to know what you paid for it and the amount of reinvested dividends through the years. This is know as your “Cost Basis”. Many times it is on the yearly brokerage statement you get with your taxes or it can be shown on your 1099-B tax document. You also need to know the date when the stock was purchased, or at the very least, if you owned it for over a year before it was sold.
It is possible that your broker may not have tracked this info because you owned the stock before it was transferred to them. Then it required some extra work to get that number.
You only owe tax on the GAIN…the difference between the sales proceeds and the cost basis. You may even have a loss. You can deduct losses against gain. You can even deduct losses that exceed gain against your over income. Up to $3,000 in capital losses or $1,500 if filing Married Filing Separate. Excess losses are carried to future years.
Capital Gain tax rates are lower than regular tax rates. If your other taxable income is in the 15% or lower tax bracket then your capital gain tax rate is only 0%. If you are in a higher tax bracket then your capital gain tax rate is 15%. And if you are in a high tax bracket your capital gain tax rate is 20%. Proper tax planning is essential this year so you can possibly plan stock sales at year end to take advantage of the lower, possibly 0% tax rate, on capital gains.