When do I have to pay taxes on my investments?

Paying taxes on your investments usually occurs when you sell your holdings or have another taxable event.

There are generally two taxable events when having investments in taxable brokerage account. 

  1. When you sell your holdings
    When you sell your holdings, generally, you’ve either made some money or lost some. This can result in capital gains or capital losses.
    Capital gains are taxed and at different rates depending if you held the investments for longer than or less than a year. 
    Capital losses usually save you money on taxes, as you can deduct the losses from your taxes.
  2. When you make income on your investments
    Income on investments usually comes in the form of interest or dividends and is paid regularly throughout the year. When you receive your 1099 Composite from Altruist, looking at the 1099-DIV and 1099-INT can let you know how much you’ve earned in dividends and interest.

For a retirement account (IRA), a taxable event is when you take a distribution or take money out of your retirement account. In a Traditional IRA the disbursement is subject to income tax and capital gains tax. In a Roth IRA, the disbursement is only subject to capital gains tax.  


Carbon Collective is not a tax advisory and cannot provide tax advice. We strongly recommend talking with your certified tax professional for insights into choosing the best strategies for your specific tax situation and goals.