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Written by Jason Dolan on January 30, 2023
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Webull Taxes Explained 2023: How Are Investment Taxes Handled?

Filing your taxes associated with Webull is the same process as it is with many other financial institutions.

Webull will send you an email notifying you that your tax documents are ready for download. These documents show your overall trade outcomes for the year. You are then required to take that information and document it on your IRS tax forms. A copy of each form is sent directly from Webull to the IRS for verification. 

One thing to keep in mind is that Webull and other free investing apps will most likely not be mailing you tax forms. All communications will be handled electronically. You can either import directly into TurboTax or print out your tax forms yourself for you or your preparer.

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Taxes On Capital Gains

There are two categories of capital gains and losses: short-term and long-term.

A short-term gain is taxed at your ordinary-income tax rate.

A long-term gain is going to be taxed at either 0%, 15% or, 20% and based on your ordinary income tax bracket.

To keep that as simple as possible, you will pay lower tax rates if you hold investments longer. That is why many people follow long-term investing strategies, some of those followed by legendary investor Warren Buffett.

You will not have to pay taxes on any money that you lost while investing. Instead, you can use this to offset capital gains or ordinary income up to $3,000 in a given year. If your losses exceed this, you will be able to carry those losses into subsequent years.

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Taxes On Dividends

In the world of investing, there are two types of dividends: qualified dividends and ordinary dividends.

Ordinary dividends are taxed at your ordinary-income tax rate.

Qualified dividends are certain dividends from US companies that qualify to be taxed at the long-term capital gains rate. You also have to meet a minimum holding period. A few common investments that DO NOT qualify for this are REITs and MLP's. These have their own unique tax treatments.

When Does Webull Make Tax Forms Available?

Webull will send you an email a day before your tax documents are going to be ready for you to view. They will then send you a follow-up email the next day with your tax documents attached. The time in which you are going to receive your form is dependent on the type of account, or accounts, that you have with Webull.

Expect to receive all of these tax forms by Mid-February 2022.

1099-R: You will receive this form if you received a distribution of $10 dollars or more from a retirement account. 

Consolidated 1099: This form is used to assist you in filing your income tax return. This form will provide 1099-B from broker transactions, 1099-DIV for dividends, and 1099-INT for interest. 

Form 5498: This is a form that your IRA trustee must file with the IRS stating contributions or conversions within your retirement accounts. You will not need form 5498 to file your taxes but it's an important document to keep in your records.

Once the forms are ready, you can also download them from the Webull website. Follow these steps on the Webull website to download:

  • 1. Click
  • 2. Login with your username andpassword.
  • 3. Click "Check Document"
  • 4. Refresh the E-Document page after 10 minutes.

Tax Loss Harvesting and The Wash Sale Rule

Many investors are aware of a strategy commonly referred to as Tax-Loss harvesting. With this strategy, investors sell an investment that has not performed well and is currently running at a loss. With this loss, they seek to reduce their capital gains and therefore taxes owed.

For example, suppose you have made $5000 in capital gains in a given year. You also have a particular stock that has lost a thousand dollars. You decide to sell it and actualize that $1000 loss. Now, rather than owing taxes on the $5000 capital gains, you will owe taxes on your net gains of $4000.

This strategy is completely legal and used commonly. However, the IRS does have a provision. In some instance, investors sell the stock to actualize their losses, but then they purchase the asset immediately afterwards. The Wash Sale rule dictates that selling an investment at a loss will not reduce your tax liability if you repurchase the same or near identical investment within 30 days of selling.

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Article written by Jason Dolan

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