do i declare stocks on taxes? Complete Guide

Do I Declare Stocks on Taxes?

Do I declare stocks on taxes? Short answer: yes in most cases. This article explains when you must report proceeds, realized gains, realized losses, dividends, and other income from stock investments to tax authorities. Rules vary by country, by account type (tax-sheltered vs non-registered), and by whether you are an investor or a trader. We focus on Canada and the United States and provide practical, step-by-step guidance and examples so you can prepare or discuss your situation with a tax professional.

As of 2026-01-22, according to guidance from the Canada Revenue Agency (CRA) and the U.S. Internal Revenue Service (IRS), reporting obligations remain centered on realized events and income slips issued by brokers and institutions.

What you'll get from this guide: clear definitions (cost basis/ACB, realized vs unrealized), how to compute gains, which forms/slips to expect, differences between investor and trader tax treatment, and simple numeric examples for Canada and the U.S. If you use trading platforms or crypto-enabled services, consider Bitget for trading and Bitget Wallet for custody—activities inside registered tax-sheltered accounts may alter reporting.

Quick answer (high level)

• Generally, yes — you must report taxable events from stocks: realized capital gains, dividends, interest, and certain business/trading income.
• Registered accounts modify timing or tax treatment: in Canada, TFSA and RRSP activity is usually tax‑sheltered; in the U.S., tax-advantaged retirement accounts (401(k), IRA) defer or exempt taxation.
• Keep documentation for every trade and dividend. If you’re unsure, consult the CRA, the IRS, or a qualified tax professional.

Note: do i declare stocks on taxes is a question most investors ask; the rest of this guide explains how and why.

Key concepts

Capital asset, cost basis and adjusted cost base (ACB)

• A stock is a capital asset for most individuals. When you buy shares, the amount you paid is your cost basis (U.S. term) or adjusted cost base (ACB in Canada).
• Cost basis/ACB generally equals purchase price plus purchase fees and commissions. For multiple purchases of the same stock, you must track basis per lot or use an accepted averaging or identification method where allowed.
• Accurate basis matters: capital gain or loss = proceeds on sale (net of selling fees) minus cost basis (or ACB).

Realized vs unrealized gains

• Realized gain or loss occurs when you sell (or otherwise dispose of) the stock. Unrealized gains are paper gains while you hold the shares and typically are not taxed until disposition.
• Exceptions exist: for certain trader elections (e.g., mark-to-market for traders in the U.S.), holdings may be treated as if sold at year-end.

Capital gain vs income (business/trading income)

• Capital gain: profit from sale of a capital asset; usually receives preferential tax treatment in many jurisdictions.
• Business/trading income: frequent or professional trading can be recharacterized as ordinary business income and taxed at full rates.
• Tax authorities evaluate frequency, holding period, financing, expertise, and intent to decide whether trading is an investment or a business activity.

How stocks are taxed — Canada

Primary CRA references include T4037 (Capital Gains) and Schedule 3 reporting guidance. Brokers issue slips such as T5008 (statement of securities transactions), T5 (investment income) and T3 (trust distributions).

Capital gains and losses (what to report)

• Canada taxes capital gains at a 50% inclusion rate: report 50% of the taxable capital gain as taxable income.
• Example: if your total capital gain is CAD 10,000, CAD 5,000 is included in taxable income for the year.
• Report realized gains and losses on Schedule 3 of your T1 return. Capital losses can offset capital gains; net capital losses may be carried back up to 3 years or carried forward indefinitely.

Dividends and interest

• Dividends: Canadian eligible dividends receive a dividend tax credit; non-eligible dividends have a different gross-up and credit. Brokers report dividend income on T5 slips. Dividend income has preferential treatment relative to interest.
• Interest income (bank interest, most bond interest) is fully taxable at your marginal rate and reported on T5 or other slips.

Day trading / business of trading

• CRA factors used to decide business income treatment include transaction frequency, length of holdings, intention to earn profit from short-term market movements, use of borrowed money, and the taxpayer’s background.
• If trading is treated as business income, 100% of the profit is taxable and losses may be fully deductible against other income—this differs from capital loss restrictions.

Registered accounts (TFSA, RRSP, RESP, etc.)

• TFSA: investment income and capital gains inside a TFSA are generally tax-free for the holder, both while inside the account and on withdrawal.
• RRSP: contributions are tax-deductible and growth is tax-deferred; withdrawals are taxed as income when taken.
• RESP and other registered plans have specific rules for beneficiaries and grants. Activity inside registered accounts normally does not trigger reporting by the account holder, but account issuers still report certain contributions or distributions.

Tax slips and documentation (T5008, T5, T3, etc.)

• Common slips: T5008 (dispositions), T5 (investment income), T3 (trust/mutual fund distributions). The T5008 may report proceeds but not ACB — taxpayers must keep purchase records.
• Keep trade confirmations, statements, and records of corporate actions (splits, mergers) and foreign exchange conversions for non-CAD transactions.

Special rules (superficial loss, foreign investment reporting)

• Superficial loss: if you sell at a loss and, within 30 days before or after the sale, you or an affiliated person repurchases the same or identical property, the loss is denied until the replacement is disposed of.
• Foreign investments: report foreign income; foreign withholding tax may be claimed as a foreign tax credit where eligible.

How stocks are taxed — United States

Primary IRS references include Form 8949, Schedule D, and relevant publications on capital gains and dividends.

Capital gains and losses (short-term vs long-term)

• Short-term capital gains apply to assets held one year or less and are taxed at ordinary income rates.
• Long-term capital gains apply to assets held more than one year and are taxed at preferential rates (0%, 15%, or 20% depending on income level, with potential surtaxes in specific situations).
• Report gains and losses on Form 8949 and summarize on Schedule D.

Dividends and interest

• Qualified dividends: taxed at long-term capital gains rates if holding period and issuer requirements are met.
• Ordinary (nonqualified) dividends and interest income are taxed at ordinary income rates and reported on 1099-DIV and 1099-INT respectively.

Traders vs investors — mark-to-market election

• Traders in securities may qualify to elect mark-to-market (Section 475(f)): this treats securities as sold at fair market value at year-end, turning gains/losses into ordinary income/losses and avoiding capital loss limitations.
• Eligibility and timing of the election are technical; consult IRS guidance or a tax pro before making the election.

Tax forms and slips (1099-B, 1099-DIV, 1099-INT)

• Brokers issue 1099 series forms: 1099-B for proceeds from brokered transactions (often including basis information), 1099-DIV for dividends, and 1099-INT for interest.
• Reconcile broker 1099-B with your cost basis records using Form 8949.

Calculating gains, reporting and recordkeeping

Calculating proceeds, adjusted cost basis, and gain/loss

• Steps:
  1. Determine proceeds: sale price minus selling fees and commissions.
  2. Determine cost basis/ACB: purchase price plus purchase fees and commissions (account for corporate actions and reinvested dividends).
  3. Gain/loss = proceeds - cost basis. Positive = gain; negative = loss.
• For multiple lots, use the allowed method: in the U.S. specific identification is allowed (if you inform the broker), otherwise FIFO often applies. In Canada, adjusted cost base averaging may apply for certain assets.

Matching broker statements to tax forms

• Brokers may report gross proceeds without basis (especially for older or foreign-held lots). You must supply or compute adjusted basis to form accurate gain calculations.
• Reconcile 1099-B or T5008 entries with your trade confirmations and statements before filing.

Retention of records

• Keep purchase and sale confirmations, monthly statements, dividend slips, and records of corporate actions for at least the retention period recommended by your tax authority (commonly 6 years in Canada, 3–7 years in the U.S., but longer if audits or carryback claims apply).
• Good recordkeeping reduces audit risk and helps calculate accurate ACB.

Common scenarios and how to report them

Selling stock at a profit

• Canada: compute gain, include 50% of gain in taxable income, report on Schedule 3.
• U.S.: determine short-term vs long-term, report on Form 8949 and Schedule D, apply the correct tax rate for long-term gains.
• Example workflow: confirm sale proceeds on broker statement, subtract commissions to find net proceeds, compute ACB from purchase records, calculate gain, and enter on appropriate schedule.

Selling stock at a loss

• Capital losses offset capital gains. In Canada, unused net capital losses can be carried back three years or forward indefinitely. In the U.S., capital losses offset capital gains; up to USD 3,000 of excess losses may offset ordinary income per year with carryforward of the remainder.
• Superficial loss (Canada) and wash sale (U.S.) rules prevent immediate recognition of losses if substantially identical securities are repurchased within specified windows (30 days in Canada/U.S.).

Receiving dividends

• Report dividend income as per slip (T5 in Canada; 1099-DIV in U.S.). In Canada, apply dividend gross-up and dividend tax credit rules depending on eligibility. In the U.S., confirm if dividends qualify as “qualified dividends” for favorable rates by checking holding periods and issuer qualifications.

Transferring between accounts, gifting, inheritance

• Transfers between spouses can have rollover benefits in many jurisdictions but specific rules apply.
• Gifting: in some jurisdictions the basis may carry over to the recipient; in the U.S., gifts above the annual gift tax exclusion can have reporting consequences for the donor.
• Inheritance: many jurisdictions provide stepped-up basis at death, meaning the beneficiary’s basis is the fair market value at the decedent’s date of death; rules vary by jurisdiction.

Trading inside tax-sheltered accounts

• TFSA/RRSP and U.S. 401(k)/IRA accounts: trading inside these accounts generally does not create taxable events for the holder. Withdrawals and contribution rules govern tax effects.
• Be mindful of prohibited/foreign investments or carrying on a business inside a tax-sheltered account, which can trigger special rules or tax penalties.

Penalties, audits and common pitfalls

Underreporting and penalties

• Failure to report taxable transactions can lead to interest, penalties, and reassessments. Tax authorities cross-check broker reporting against your returns.
• If you receive a slip (T5008, 1099-B) and omit reporting, you increase audit risk.

Common errors (basis mistakes, missing slips, wash/superficial losses)

• Missing or incorrect basis is a common issue—overstating basis decreases tax owed (and may cause penalties); understating basis increases tax and may trigger reassessments.
• Failing to account for corporate actions (splits, mergers) can distort ACB calculations.
• Ignoring wash sale / superficial loss rules leads to denied losses.

Practical steps to comply

Gather slips and statements

Checklist:

• Canada: T5008, T5, T3, trade confirmations, monthly statements, contribution receipts for registered plans.
• U.S.: 1099-B, 1099-DIV, 1099-INT, trade confirmations, account statements, retirement plan reports.
• Keep records of commissions, fees, currency conversions, and corporate actions.

Choose correct reporting method/forms

• Canada: report capital gains/losses on Schedule 3 of T1; include taxable capital gains on applicable lines. Use T4037 for guidance on calculations.
• U.S.: use Form 8949 for detailed transactions and Schedule D to summarize capital gains. Traders considering mark-to-market must timely file elections and follow IRS procedures.

When to get professional help

Consider professional help if you have:

• High-frequency trading or believe trading could be viewed as a business.
• Large or complex corporate actions, international holdings, or significant foreign income.
• Significant capital losses you want to carry back or complex basis issues.

Bitget users with crypto or tokenized equity exposure should consult a tax advisor familiar with digital assets and securities, and consider using Bitget Wallet to centralize records where available.

Examples (simple numeric)

Canadian capital gain example

• Purchase: Buy 100 shares at CAD 20.00 each, commission CAD 10. Total ACB = 100 * 20 + 10 = CAD 2,010.
• Sale: Sell 100 shares at CAD 35.00 each, commission CAD 10. Proceeds = 100 * 35 - 10 = CAD 3,490.
• Capital gain = 3,490 - 2,010 = CAD 1,480.
• Taxable capital gain (50% inclusion) = CAD 740. Include CAD 740 in taxable income for the year and calculate tax at your marginal rate.

U.S. short-term vs long-term example

• Purchase A: Buy 50 shares at USD 100 on Jan 1, 2024. Sell on Jun 1, 2024 (≤1 year) at USD 150. Short-term gain = (150-100)*50 = USD 2,500 taxed at ordinary rates.
• Purchase B: Buy 50 shares at USD 100 on Jan 1, 2023. Sell on Feb 1, 2024 (>1 year) at USD 150. Long-term gain = USD 2,500 taxed at long-term capital gains rates (0/15/20% depending on income level).

Jurisdictional comparison (concise)

• Inclusion rate: Canada taxes 50% of capital gains as taxable income; the U.S. distinguishes short-term vs long-term and applies preferential long-term rates.
• Dividend treatment: Canada has gross-up and dividend tax credits for eligible dividends; the U.S. taxes qualified dividends at long-term capital gains rates if holding/issuer tests are met.
• Registered accounts: Canada (TFSA/RRSP) generally shelter growth and/or defer tax; U.S. retirement accounts (IRAs/401(k)) defer or exempt taxation depending on account type.
• Trader treatment: Both countries scrutinize frequent trading; the U.S. offers a mark-to-market election for traders under specific conditions; Canada may classify trading as business income based on factors.

Resources and official references

• Canada: CRA T4037 (Capital Gains), Schedule 3 instructions, CRA pages on investment income and slips (T5008/T5/T3). Tax preparation resources include major Canadian tax software explanations and bank tax guides.
• U.S.: IRS Publication guidance, Form 8949 and Schedule D instructions, broker 1099 guidance, and IRS pages on capital gains and qualified dividends.
• For platform users: centralize trade logs and slips from your broker or platform; if you use Bitget for trading or Bitget Wallet for custody, keep exportable transaction histories to support tax reporting.

Frequently asked questions (FAQ)

Q: Do I report holdings I didn’t sell?

A: No—unrealized gains are not reported as taxable events in normal circumstances. Exceptions include specific trader elections (e.g., mark-to-market) where year-end valuation rules apply.

Q: Are dividends taxable?

A: Yes. Dividends are taxable, but treatment varies. Canada provides dividend tax credits; the U.S. distinguishes qualified vs nonqualified dividends.

Q: What about foreign stocks?

A: You must report foreign income and may be eligible for foreign tax credits. Keep records of foreign withholding tax, currency conversions, and any foreign slips.

Q: Do I need a tax slip to report?

A: No. You must report taxable income even without a slip. Slips help match amounts to your return; if a slip is missing, use your records and consider contacting your broker.

Legal and professional disclaimer

This content is for informational purposes only and does not constitute legal or tax advice. Tax rules change and can vary by individual circumstances. Consult the CRA, IRS, or a qualified tax professional for advice tailored to your situation.

Practical next steps and Bitget note

• Gather your slips (T5008/T5/T3 or 1099-B/1099-DIV/1099-INT), trade confirmations, and statements.
• Reconcile broker-reported proceeds with your cost basis records and compute gains/losses before filing.
• If you trade frequently or hold international securities, consider professional help.

For traders and investors who manage securities and digital assets, Bitget offers trading infrastructure and Bitget Wallet for custody and recordkeeping. Using a single platform for trading history can simplify reporting and help maintain the records tax authorities expect. Explore Bitget platform features to centralize your transaction history and export reports for tax time.

Further explore Bitget resources and consult a tax professional to ensure your reporting is complete and accurate.

Note on timeliness: As of 2026-01-22, tax reporting requirements described here reflect CRA and IRS guidance current at that date. Always check for updates from your tax authority before filing.