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Paul Anderson CPA > San Diego Tax Updates  > How to Approach Filing Your Taxes If You’ve Been Trading on Robinhood

How to Approach Filing Your Taxes If You’ve Been Trading on Robinhood

To sell or not to sell, that is the question. What’s the good in selling stocks or crypto for profit if you’re not optimizing your gains during tax season? Don’t take an L or risk an audit to the government after all the hard work and risk you’ve already been through.

The process of trading and selling stocks and cryptocurrency on app platforms like Robinhood is made simple, but the unfamiliar and vast paperwork that comes along with all the transactions can become overwhelming, especially in preparation for tax season. We’ve outlined a crash course for getting your things in order and to the right people/resources so you’re getting everything you can out of your trades (and government loopholes).

An Investor’s Step-By-Step Guide to Tax Prep

Whether you’ve made many or few investment sales this year (and regardless of whether you’ve done a good job at timing those sales right or not), you’re going to have to collaborate with the IRS to confirm those numbers.

Step One: Obtain the Necessary Forms

A variety of forms will likely be sent directly to the IRS by Robinhood/other market exchange platforms, and they’ll also be sent to you by mail/email. These forms will represent your taxable events (realized gains, losses, interests, and dividends) of your stocks and/or crypto.

Brokerages, investment platforms, mutual fund companies, etc, like Robinhood, will provide you, their trader, with the following forms (at least):

  • 1099-B (wash sales violations, investment sales, cost basis).
  • 1099-DIV (dividends and capital gain distribution)
  • 1099-INT (interests).
Step Two: Bookkeepers to the Rescue

Luckily you don’t have to sort through the chaos alone. Professional bookkeepers and tax CPAs like Paul Anderson will help you sort and compile all the relevant data neatly. He’ll compile your forms and check your logs in order to organize everything the IRS (or your tax filing app) needs. We suggest keeping your own notes surrounding all transactions (dates, acquisitions, fees, commissions, cost basis, mergers, how many shares, etc) whenever you can, which helps Paul paint a clearer picture.

He’ll also identify your capital gains/losses, interest, and dividends, amongst other things; Paul Anderson can help you organize more than just your trading info, he can compare and contrast those forms with your mundane tax forms and stats to help you realize your fullest refund potential.

He can help you identify if you qualify for an HSA with your employer, help you optimize your capital losses with tax-loss harvesting, or figure out whether it’s smart in your case to use retirement accounts to bring down your yearly taxable amount. This can be super helpful in a slow or rough trading year. He could reduce your taxable income by massive amounts, tens of thousands even, through clever investments (loopholes). Those tax-advantaged accounts will also compile interest onto those funds, so it’s a win-win. Still doesn’t beat the HSA’s triple win. Don’t miss out on these huge deduction/tax break potentials.

Step Three: File Your Taxes

Now that everything is organized and you’ve got a plan, you just have to distribute your earnings appropriately and submit the final information to the government for revision.

Sorting through this type of information isn’t easy, that’s why a Ccertified Ppublic Aaccountant like Paul Anderson can help make sure you get what’s yours. No one likes losses, nor audits. Learn more here.

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