<p>May I ask if I should worry about not filing taxes when I have no ordinary income, but with a small capital gain? I am not active in trading the equities market, but I did open 2 accounts last year, one with only 500, and the other with 3,000. I have a small gain in the other, and insignificant loss in the other one (smaller account). My overall gain is about 300 bucks. There were months when I was really active, but mostly, I did not buy or sell anything in most months. I was just testing if I have the skill, plus those were gift money from my aunt and a bit of my savings. </p>
<p>It’s a headache filing the tax, plus I realize I need to buy the premier turbo tax for like $50. </p>
<p>I read something in the news months ago, about IRS going after a small business because he apparently owes 2 cents. Not sure if that is true or not. </p>
<p>Do not mess with the IRS. Your trades have been reported to the IRS as if you made big bucks. It is up to you to report your cost basis and show what the actual gain really is. A paper Sch D does not cost that much more than a sheet of paper. ;)</p>
<p>Read the “who must file” sections in the IRS site. If you could be claimed as a dependent by someone, you must file if your “unearned” (ie., investment income) is more than 1000. Also if your “earned income” is more than 6100. Spend some time reading from different sources to make sure you’ve got it right, and don’t file if you don’t have to. Of course if you don’t file, you don’t get a refund for any withholding but it sounds like you don’t have any. </p>
<p>Also, if your cost basis in the sales didn’t get reported, the IRS makes an assumption that it was zero, and writes you a letter that says they think you owe them the tax on the “gain”, plus a bunch of unreasonable penalties. Then you send them the information that proves the basis and tell them to take a hike. So it’s possible that its easier just to file a return that shows you owe no tax than it is to ignore it. Most brokerage firms are not reporting the basis for everything. </p>
<p>Finally, even if you owe no tax, your parents may be required to report your gain on their own return and pay tax at their own marginal rate on it. This happens if you are under 19, or under 24 and a full time student. Obviously in that case you don’t file your own return. See the instructions for details. </p>
<p>If your gross proceeds exceed your standard deduction and personal exemption amount, then you need to file, no matter what the gain or loss was. But if your gross proceeds are too small to have to file a return, then no. You don’t need to file it.</p>
<p>You could file WITHOUT TurboTax; I just filed for our D last night. All the needed forms are available and fillable on-line. Since your net profit, you say, is only $300, under the federal government you would not need to report it, but it would likely be safer to file a return, showing your basis and that you owe nothing. My daughter’s return consisted of Form 1040, Schedule B, Schedule D, spreadsheets showing the gains/losses/dividends. I also filed a return for our state taxes. Her net dividends were $30; wanted to carry forward her over $5000 capitol loss, so really wanted to keep filing her return but not buy TurboTax.</p>
<p>It’s really not rocket science and you can look at examples online.</p>
<p>The public library and/or post office often has free forms you can peruse. </p>
<p>(My sibs didn’t itemize where they lost money and the IRS claimed they owed 5 figures because the IRS somehow just got the reported sales and no basis so assumed it was all profit; it got cleared up but really scared them when they got notices from the IRS that they owed all these taxes for gains they never earned!)</p>
<p>You do not need Turbotax. Everything you need is right at <a href=“http://www.irs.gov”>www.irs.gov</a> If you can do the math to do the investments, you can file this stuff on your own. If you get stuck, ask the folks at your own public library to put you in touch with a volunteer tax preparer. They will surely have information about that.</p>
<p>Thank you for the wonderful replies!! I’ll check out the IRS site, and maybe ask for assistance from the public library. I might file on the first week of April. I’ll try to check turbo tax again because the reason why I was overwhelmed was when I attempted to file my tax, and I think I was supposed to enter all the transactions individually, and that’s the problem…although, I only have a few months in which I was active, my number of trades was over a 100. </p>
<p>This is why I thought, I might need a software that allows me to enter the transactions by downloading the excel file and transfer it automatically to the tax site. I just can’t seem to enter each transactions individually. </p>
<p>Why anyone who is not a professional trader would want to make over 100 trades in a few months is beyond me. Maybe when you see how much hassle it is to enter 100s of trades in your taxes you might reconsider your strategy, which sounds like it produced a profit of <$3 per trade.</p>
<p>All trades will need to be entered. It is also confusing to me why you traded so much – to be blunt, it doesn’t sound like you are very good at it, or had a handle on the tax filing implications of your actions. Stop dabbling because you lose all your seed money. </p>
<p>Also, it has been several years, but one year I upgraded to Deluxe, and at least at that time TurboTax did not handle if your stock had split (so you had to do the math yourself on the split for basis calculations). They might have improved that functionality by now, though.</p>