When you sell shares or stocks, you want to walk away with as much of your profit as possible. Part of this process includes making the right tax deductions after finalising the sale of any stock.
Understanding the deductions, you can claim are dependent on the specific case. Every situation is different, and it’s crucial that you understand your situation specifically and what deductions are allowed.
In this article, we’ll examine what tax deductions you can claim when selling shares. If you’re in this situation, don’t sell shares until you’re certain of the tax privileges you have first.
Employer Owned Stocks
In certain cases, employer-owned stocks may allow certain tax deductions. Because these were acquired as a result of employment and not with cash or gains, you can claim certain deductions that normally wouldn’t be allowed. This can provide additional cash in your pocket after the sale is finalised and provide relief when tax time comes.
Sale Expenses
Sale expenses can also be deducted from the taxes owed when you sell shares. Sale expenses include the following:
- Any stockbroker’s commission
- Taxes or fees surrounding a transfer of any share
- Option premiums when it comes to shares you own
Any of these expenses you may incur because of transferring or selling a share can be written off when tax time comes. Whenever a situation is present where the capital gains of a sale are reduced, situations leading to this reduction may warrant the need for deductions or write-offs.
It’s important when these situations arise that you make your broker aware of any changes. This is especially important when it comes to tax deductions because the value of the stock needs to be adjusted on the bottom line.
You’ll also want to make sure you fill out the proper tax forms and documentation regarding any write-offs as well. This is important for providing proof at the end of the year, or else you may not receive credit.
If you have any questions regarding this process, contact your local stock expert. They can provide much-needed assistance when it comes to legalities and sales of any shares.
