Filing taxes is a complicated process. Now imagine adding stocks bought and sold in apps like RobinHood to your mix. This article explores some of the benefits and pitfalls of stock apps like RobinHood. It will also help you understand how you can streamline the process of obtaining “Robinhood taxes” with a tax accountant.
Sweep down from the forest. Obtain the evil King’s money and save the day by helping the poor. That’s what Robinhood did.
Like many stock apps, RobinHood offers you the promise of “Robinhood taxes.” That is, saving yourself from paying high taxes on stocks. But how much of this is true? Read on to find out about the history of stock apps like RobinHood and their pros and cons.
The RobinHood Stock App
Stock websites have existed since the 1990s and are very popular. The reason that the RobinHood stock app, as well as others like it, are popular is due to a certain number of reasons.
The Benefits of app like Robinhood
- With the RobinHood app, you don’t need to pay any fees for trading or for commissions. Typically, other apps or software would require you to pay some sort of fee. RobinHood does this all for free.
- At the end of the year, RobinHood helps you by providing a 1099 tax form. The 1099 is a form for income made outside of ordinary wages.
- The RobinHood app is very convenient and promises to help you lower your taxes at the end of the year.
As you can guess, stock apps are one way that you can get your foot into the door of buying and selling stocks. It makes it easier to track and monitor while providing you with the simplicity of an app. However, there are many pitfalls to using these apps that need to be mentioned.
The Pitfalls of Using Stock Apps Like RobinHood
- Filing taxes, as was mentioned before, is not an easy process. It’s easy for these apps to make mistakes. For example, the app considers all stocks and sometimes might encourage you to sell a stock that would incur more taxes. This is because you don’t get to choose which stock is sold. So, if you’re not careful or aren’t very informed about this, you might be paying more taxes than you would have been had you not used the app.
- There are different tax requirements based on your tax bracket. You need to know where you fall so that you know how much taxes to pay based on your stocks.
- The 1099 does account for the taxes that should have been taken out. You will need to take the taxes that should have been taken out normally on your own. So, you may end up needing to pay Robinhood taxes for having made profit.
Streamline the Process and Save Yourself Some Time
While there are many benefits to the RobinHood app and other stock apps, it’s important to simplify filing your taxes. One way that you can avoid the flaws associated with the stock apps while still getting to use them for their benefit is by having a consultation with a tax accountant.
Some of the benefit of consulting with the tax account include:
- Knowing how to take out the taxes that were not taken out of the 1099 tax form.
- Getting advice on which stocks would help you decrease the taxes that you’d need to pay.
- Avoid getting audited by having an expert view your forms before submitting them.
So, yes, you can still have your cake and eat it too! Enjoy the benefits of stock apps, but avoid the pitfalls. Have an expert, like AA Tax & Accounting Services help you!