How Do You Pay Taxes on Robinhood Stocks?

The Robinhood platform lets you invest in stocks, ETFs, and cryptocurrencies without having to pay brokerage fees. Notably, Robinhood pioneered commission-free trading that other brokerage firms have adopted, which lowers the cost of securities investing. Millions of Americans have embraced Robinhood’s investing service, which is available through a smartphone app and the company’s website. If you’re new to the app, you may have questions about how Robinhood handles taxes on stocks.

Robinhood stocks and taxes

Investing in stocks and other securities through the Robinhood platform is free. However, Robinhood investors, like all individuals on an investing platform, must report earnings with the IRS. 

So, how do you pay the taxes on Robinhood stocks? First, not all Robinhood stock investors have to pay taxes every tax season. For tax filing purposes, Robinhood will send you a consolidated 1099 tax form that summarizes all of your transactions for the whole year. 

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Source: IRS

The Robinhood tax document is made available in February of the tax year. As a result, investors have enough time to prepare and file their tax returns before the typical April 15 tax filing deadline. 

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Will you owe taxes on Robinhood stocks?

You may owe Robinhood stocks taxes if you made a profit from buying and selling stocks on the Robinhood platform. Also, you may owe taxes if you received dividend income on your Robinhood stocks or ETF investments. 

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If you completed taxable transactions on your Robinhood stocks account, then the company will send you the 1099 tax document. You can access the tax form under “Tax Documents” in the “Account” section on the Robinhood app or website. You can download and print the form or import it to the TurboTax app for filing taxes. Notably, you can receive up to a $20 credit for filing Robinhood stocks taxes using TurboTax. 

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Robinhood crypto taxes

Robinhood stocks and cryptocurrency trades might be subject to capital gain tax. The tax will be levied on the profit realized from the sale of a capital asset like stocks or cryptocurrencies. 

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robinhood crypto taxes

If you sell a stock or cryptocurrency, like bitcoin, for profit after holding it for more than one year, the profit would be subject to long-term capital gain tax. The long-term capital gain tax rate can be 0 percent, 15 percent, or 20 percent depending on your tax bracket. 

Similarly, the profits from selling a stock or crypto asset that you held for less than one year would be subject to short-term capital gain tax. Short-term capital gain tax rates are similar to ordinary income tax rates and can be as high as 37 percent.

Finally, you can deduct losses from Robinhood stock or crypto trades from your tax bill.

View more information: https://marketrealist.com/p/robinhood-stocks-taxes/

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