Architects work hard for their money, but do architects do a good job at making that money work for them? Whether you choose to invest in real estate or a 401 (k), socking money away for retirement is one of the most important investments a person can make. 
But if you choose to invest in stocks, do you know how these financial instruments are taxed? In this article, we will discuss the tax implications of the purchase and sale of stocks.
When making the decision to buy stocks, that person now becomes an investor. Investors may need to pay income taxes on the stocks that sit in their portfolio.
If the investor makes the choice to sell a stock that has appreciated (or increased) in value from the date of purchase, that elevation in value is referred to by the Internal Revenue Service (IRS) as capital gain – and it’s taxable.
Conversely, when a stock is sold at a price that is less than the price for which the stock was purchased, this change is known as a capital loss. If there were capital gains realized on some investments, these capital losses from the other stocks can be used to decrease the amount of taxes owed.
If that stock was held for less than a year prior to selling, the capital gains paid are known as short term capital gains. These stocks are taxed at a rate of up 37%, depending on filing status (single vs MFJ, etc.) If the stocks are held for greater than a year, the sale is deemed as long term capital gains. These rates are much lower at the maximum rate of 20%, also determined by filing status.
While making some investments and becoming a day trader on stocks may seem like a sexy idea, understanding the potential tax implications can save you a great deal of headache and pains to the wallet in the future. Stay tuned to The Wealthy Architect for more tips and tricks on building your financial house.
