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So You Played the Meme Stock Game and Won: What Do You Do Now?

Kale Goodman is a serial entrepreneur and has over 18 years of service in the accounting field.

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You probably didn't consider taxes when you sold that GameStop stock but, whether you made an extra $1,000 or even $1 million and made quick trades with that money, it's now taxable.


For those of you who are still holding on to those GME stocks and plan on keeping them for over a year, you have entered the long-term capital gains arena. That means that your capital gains tax will be lower once you do cash out and “level up.”


For all you short-timers, you have now entered the short-squeeze zone and will be taxed on your gains as earned income.


Many people who jumped onto the Robinhood app and just started trading didn’t have the tax aspect on their gains (or losses) in mind; however, next time, they definitely will.


Whether you use something like the TD Ameritrade or the Robinhood app, you’ll get a statement from them that you have to give to your accountant for what you owe. If you didn’t plan for this once you pulled that money out of your trade account, you’d be in for a surprise at the end of the year.


The interesting thing about having losses or gains in stocks is that it only applies to stocks. However, It does affect your overall taxable income. Plus, the percentage that you get taxed comes from your overall income. Every trade you make gest reported. If you do it through the Robinhood app, they keep a list of those trades and sales till the end of the year, and that's the statement you get. You only get a statement once you sell your stocks. If you invest in it for 2021, you won’t get a statement until you sell those stocks. So what can you expect to pay?

Jovana Pitones, a senior accountant at Nexgen, gave us a breakdown of all the income brackets and the percentage you can expect to pay.


Long-term capital gains tax rate 2021

Your income

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0% $0 to $40,400

15% $40,401 to $445,850

20% $445,851 or more

Short-term Capital gains rate 2021

  • 35%, for incomes over $209,425 ($418,850 for married couples filing jointly);
  • 32% for incomes over $164,925 ($329,850 for married couples filing jointly);
  • 24% for incomes over $86,375 ($172,750 for married couples filing jointly);
  • 22% for incomes over $40,525 ($81,050 for married couples filing jointly);
  • 12% for incomes over $9,950 ($19,900 for married couples filing jointly).
  • The lowest rate is 10% for incomes of single individuals with incomes of $9,950 or less ($19,900 for married couples filing jointly).



so-you-played-the-meme-stock-game-and-won-what-do-you-do-now


You can only take your capital losses from your capital gains. There are people out there who are under the impression that they can take deductions from their personal life or their business to offset some of the profits, and you can’t. Prepare for that! Be smart with your gains and know what to do when you have losses.


Don’t try to lose a bunch of money in the stock market to offset the taxation. Making more money is always the goal, but knowing what you made or lost in capital gains will eliminate any surprise on what you owe. The last thing you want to do is owe the IRS money because of your lack of knowledge.


Next time you invest in the stock market, especially when a crazy scenario like the GameStop stock happens, you’ll be prepared for the taxes coming out from your capital gains. No more end-of-the-year surprise statements!



so-you-played-the-meme-stock-game-and-won-what-do-you-do-now

© 2021 Kale Goodman

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