Do You Have To Claim Stocks When Filing Taxes?

No one likes to lose money – especially to the IRS. However, unfortunately, there are times when we are required to by law. One of those times is when we file our yearly income taxes.

Now, many people might be under the impression that only wages earned through jobs have to be reported. Not so. Did you know that all American taxpayers are also required to report other forms of income, including stock earnings?

Yep, sadly, the IRS requires all taxpayers to list both gains and losses when it comes to stock holdings. Moreover, taxpayers have to list all stocks in their holding, whether or not they sold any during that particular tax year.

At this point, you might wonder why it’s necessary to report all stock options if you didn’t sell any to make a profits. Let’s take a look at what exactly it is you need to claim and why.

Stock sales

According to a Fox Business article, when you sell a stock that you’ve held for at least a full year, any amount you make in profits is taxed at a rate equal to the long-term capital gains rate. There’s one bit if good news though, this particular rate is lower than the rate applied to other taxable income. Basically, you’ll be looking at a tax rate of 15 percent if you happen to be in the upper 25th percent of the tax bracket and 5 percent if you are within the 15th percent or lower tax bracket. if you are in a 25% or higher tax bracket and only 5% if you are in the 15% or lower tax bracket. However, on the down side, if you’ve held a stock less than a year and sell it, your profits will be taxed at the regular income tax rate. How’s that for a tax bummer?!


Yep, as you may have already deduced, even if you don’t sell any stocks, those that earn any dividends are subject to being taxed. Plus, any dividends you earn are taxed at the regular income tax level. There is a loophole, though. If your dividends are paid by a U.S. corporation, or certain foreign corporations, and the holding period of the stock is longer than 60 days, then those dividends are called “qualified dividends” and are subject to a significantly lower capital gains tax rate that equals anywhere from 0 to 15 percent. Curious if you have qualified dividends? Speak to a tax lawyer in your area, who can shed some light on the breakdown of your stock dividend taxes.


On the upside, you have a right to claim your losses on your income tax filing. This means that you have the potential to make some of the money you lost back. Unfortunately, you can only deduct up to $3,000 in stock losses, but if your losses are above this total, you can claim them in future filings.

If you happen to forget the fact that you must report stock sales and dividend earnings on your income tax return, you may receive an audit letter from the IRS a few months later. If you still have any questions regarding what you should or shouldn’t claim, it’s always best to consult with an experienced tax attorney so you don’t end up owing money PLUS interest to the IRS.