Q: When do you pay taxes on stocks?
A: Good question.
One consideration: As a trader, you may be required to make estimated tax payments. You need to make estimated tax payments at least every three months. This is because your income tax withholding (from your day job) may not be sufficient to pay your federal income tax in full by the end of the year.
Estimated tax is the method used to pay tax on income that is not subject to withholding. Taxpayers must make estimated tax payments if you expect to owe at least $1000 in tax after subtracting your withholding and credits, and you are required to pay the lessor of:
1. 90% of the tax to be shown on your current year tax return, or
2. 100% of the tax shown on your previous year tax return.