In this video I discuss how to calculate your tax bill when you sell stocks. There are four different types of capital gains whenever you sell a stock; Short Term Capital Loss, Short Term Capital Gain, Long Term Capital Loss, and Long Term Capital Gain. This is a video meant for beginner investors and I do not cover wash sale rules nor do I mention the maximum losses you can take each year (which is $3000 a year in losses). You want to make sure that when you sell a stock, if you have a lot of short term capital losses, that you do not sell any stocks that have long term capital gains because that means the long term gains will cancel out your short term losses and you will lose out on the tax savings from the short term capital loss. You can also avoid paying taxes on short term capital gains with long term capital losses. However, I do not recommend selling a stock just for the tax benefits. Especially if you like the stock and think it will recover. Overall, the most advantageous quadrant to be in is the long term capital gains quadrant.
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