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I have recently opened a brokerage account and want to deposit some funds. Before I begin investing, I am curious if there are any caveats to withdrawing my money in the future. I am a US citizen residing in the EU.

1) In a nutshell - and I realize it's a complex topic - how are taxes estimated from a normal stocks brokerage? Are you taxed once you withdraw all funds? Or does the brokerage send you a tax statement at the end of the year? Are your invested earnings taxed even if you haven't closed with them?

2) Lets say I originally put $10k in my account and in the future I want to withdraw the original amount plus $2k that I earned. Does the brokerage keep anything for themselves? What is taxed? Just the earned $2k?

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  • Did you ask these questions before opening the account? Did you read any of the paperwork they sent you?
    – Dilip Sarwate
    Commented Apr 25, 2015 at 16:44
  • @DilipSarwate That's the thing. I haven't signed any paperwork - digitally or otherwise. You can still open an account before adding funds and engaging in trading with many online brokerages.
    – frankie
    Commented Apr 25, 2015 at 17:17

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Assuming a USA taxable account: Withdrawing funds from a brokerage account has nothing to do with taxes. Taxes are owed on the profit when you sell a stock, no matter what you do with the funds. Taxes are owed on any dividends the stock produces, no matter what you do with the dividend. The brokerage sends you a form 1099 each year that shows the amounts of dividends and profits. You have to figure out the taxes from that.

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  1. You will get a 1099 from the broker listing all taxable activity, including interest, dividends, capital gains (long/short). If you have transferred assets in kind to another broker midyear, you'll get another 1099 from the 2nd broker with YTD numbers.
  2. Other than transactions costs (ask them), the only withholding could be federal withholding taxes if you've asked the broker to withhold or neglected to return the proper form (ask). "what is taxed?" depends on the source (interest, short or long gains, dividends). Talk to someone at the firm re: your account.
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