[USER]

If you have for example 100k in the s @ p 500 and it makes 10 % so goes to 110k.

Do you pay tax on the 10k or is it only when you draw it down and sell your stock?

[Kurt]

Only if the government implements a wealth tax whereby we get taxed on unrealized gains

[Irene]

There are a handful of states that do not have capital gains tax on investments including Florida, Tennessee, New Hampshire..

[Sean]

You pay tax on dividends, and realized capital gains. So, if your fund had zero dividends or capital gains distributions and solely with from 100k-110k based on growth then you’d only owe taxes on that 10k of growth once you sell.

[Tolga]

You only pay taxes when you sell your stock and realize the gains. If your investment grows from $100K to $110K but you don’t sell, you don’t owe any taxes yet.

When you do sell, the tax treatment depends on how long you held the investment:

Short-term capital gains (held for 1 year or less)**: Taxed as ordinary income.

Long-term capital gains (held for more than 1 year)**: Taxed at a lower rate (0%, 15%, or 20%, depending on your income).

If your investment is in a tax-advantaged account (like a 401(k) or IRA), taxes work differently. Let me know if you need details on that!

[Christine]

Realized gains are taxed. The $10k is an unrealized gain and not taxed until you sell/withdraw. If the $100k was after tax money.

You can pull that out anytime without tax consequence because that money was already taxed.

[Author]

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