How to pay tax on stock investing?

Ok say I buy a stock and then I sell it. the profit I got from that stock I invest in another stock do I have to pay taxes if I use my profit on investing it in stocks again or do I only pay taxes when I take the profit I make out and use it for other things. Live in bc and buy us stocks. Please help

thanks

Public Comments

1. you must pay taxes on all profit

Using your example:
you buy a stock and then sell it: you track your profit so you can report it at the end of the year.
you use the money you received to buy another stock and then sell it later: you track your profit so you can report it at the end of the year.
you use the money to buy another stock and sell at a loss: you track your loss so you can report it at the end of the year.

When doing your taxes next year, you will record your total profits and substract losses and pay taxes on the net

Note:
- your commissions for buying/selling the stock should be deducted from your profits (and added to your losses)
- In the US, if you keep the stock for less than 1 year, you will pay taxes equivalent to your regular taxes. If you keep them for more than 1 year, you pay capital gain taxes on the profit. Most investors will check the value at about 1 yr and either sell prior to the 1 yr anniversary and write off the losses or sell after the 1 yr anniversary and pay less taxes

One way to defer paying taxes is opening an IRA account and trade through it. Only taxes you will need to pay is when you take out the money years later

2. In the example you cited you will pay the tax on your profits, if you take out the profits or not. That's why the IRS invented Schedule D to your Form 1040 tax return.

Only in retirement accounts can you trade in and out of stocks without paying the appropriate capital gains taxes. But then your money is tied up until retirement or at least age 59-1/2, or the IRS hits you with an early withdrawal penalty.

The only other way to sell an investment asset and reinvest in another without paying (deferring) taxes on any gain is in real estate, in a tax-deferred 1031 exchange. These rules also apply to like for like exchanges of business assets.