Use this **Robinhood Tax Calculator** to quickly determine the capital gains or losses from your trades, separating them into short-term (taxed as ordinary income) and long-term (taxed at preferential rates) holding periods.
Robinhood Tax Calculator
Robinhood Tax Calculator Formula:
Formula Source: Investopedia – Capital Gains Calculation
Variables:
- Purchase Price per Share ($): The original price you paid for each share. This is part of your Cost Basis.
- Sale Price per Share ($): The price you received for each share when you sold the asset. This determines your Proceeds.
- Number of Shares Sold: The total quantity of the asset transacted.
- Days Held (Holding Period): The number of days between the purchase and sale dates. This dictates whether the gain/loss is Short-Term (taxed at higher ordinary income rates) or Long-Term (taxed at lower preferential rates).
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What is Robinhood Tax Calculation?
Tax calculation related to Robinhood primarily revolves around **capital gains and losses** from selling stocks, ETFs, or cryptocurrencies. When you sell an asset for a profit, you incur a capital gain, which is generally taxable. If you sell at a loss, you incur a capital loss, which can be used to offset gains.
The key distinction is the holding period. Short-Term Capital Gains apply to assets held for 365 days or less and are taxed at your marginal ordinary income tax rate. Long-Term Capital Gains apply to assets held for more than 365 days and are taxed at lower, more favorable long-term capital gains tax rates (0%, 15%, or 20%, depending on your income).
At the end of the year, Robinhood will provide you with a **Form 1099-B**, which summarizes all your taxable brokerage transactions, including the proceeds, cost basis, and holding periods necessary for filing your taxes.
How to Calculate Capital Gains (Example):
- Determine Cost Basis: Purchased 50 shares of Company X at $100 per share. Cost Basis = $100 × 50 = $5,000.
- Determine Proceeds: Sold the same 50 shares at $120 per share. Proceeds = $120 × 50 = $6,000.
- Calculate Gain/Loss: Gain = Proceeds – Cost Basis = $6,000 – $5,000 = $1,000 Gain.
- Check Holding Period: If the shares were held for 200 days, the gain is classified as Short-Term. If held for 400 days, it is Long-Term.
- Apply Tax Rate (Outside Calculator Scope): The resulting $1,000 gain is the *taxable amount*. You then apply the relevant tax rate based on the classification and your personal income bracket.
Frequently Asked Questions (FAQ):
No. You generally only pay taxes on realized gains (selling an asset for a profit) or on income such as dividends or interest. Unrealized gains (when an asset you own increases in value but you still hold it) are not taxable until you sell.
Short-Term Capital Gains are from assets held for one year (365 days) or less, and are taxed like regular income. Long-Term Capital Gains are from assets held for more than one year, and are taxed at preferential, lower rates (0%, 15%, or 20%).
The 1099-B is the tax form provided by your broker (Robinhood) that reports your sales of stocks and other securities. It is required for filing your taxes if you sold any assets during the tax year, as it documents your proceeds and cost basis.
Robinhood primarily uses the First-In, First-Out (FIFO) method by default to determine which shares were sold, but allows for other methods. The Cost Basis is typically the original purchase price plus any commissions, though Robinhood generally has $0 commission.