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Brokerage accounts are merely conduits for holding your investments, not investments in and of themselves. As a result, simply withdrawing cash from your brokerage account won't cause your tax bill to go up. However, if you're selling assets in the account to free up cash to take out, you could be on the hook for a larger bill from the Internal Revenue Service.
Brokerage Account Basics
A brokerage account holds your stock investments, but it's not considered a tax-sheltered account like an individual retirement account or 401(k). That means that withdrawing money from it, by itself, isn't a taxable event the same way taking money out of your checking account doesn't mean extra taxes. However, it is a taxable event any time you sell an investment in the brokerage account, regardless of whether you actually take the money out of the brokerage account or not.
The starting point for figuring your taxes on selling shares in your brokerage account is knowing your basis -- usually what you paid to acquire the shares. Your basis includes any transaction fees on the purchase. For example, if you bought 100 shares of RTX stock for $20 per share and paid a $10 transaction fee, your total basis is $2,010, or $20.10 per share. If you have shares your inherited, your basis equals the value of the shares on the day the decedent died, even if that's substantially different from the original purchase price of the stocks.
Once you know your basis, you need to know your net proceeds from the sale to figure your taxable gain or loss. The net proceeds equal what you sold the shares for minus your transaction costs. Subtract your basis from your net proceeds to figure the taxable profit or loss. So, if you sell 100 shares of RTX for $2,420 but pay a $10 trading fee, your net proceeds are $2,410. If your basis is $2,010, you have a $400 profit.
The tax rates applied to your taxable gains depends on how long you owned the particular investment -- not how long you've had the brokerage account open. If you owned the investment for more than one year, your gains are taxed at the lower long-term capital gains rates, which max out at 20 percent as of 2013. If you owned the investments for a year or less, you're stock paying the ordinary income tax rates, which run as high as 39.6 percent as of 2013.
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