'I think the meme stockers don’t actually know about their problem yet,' said Matt Metras, an enrolled agent with MDM Financial Services.
When Jason Gutierrez kept refreshing GameStop’s performance between work tasks during the wild, early days of 2021, he admits future tax obligations weren’t his No. 1 priority.
That’s pretty much a wash in his view. In the following months, Gutierrez tucked up to $1,000 in a savings account just in case he had to cover any additional taxes.Gutierrez was almost one of the lucky ones. A year ago, the short squeeze on stocks like GameStop and AMC became a social-media phenomenon and Wall Street morality play wrapped into one pandemic-era event.
Meanwhile, the value of bitcoin BTCUSD, +0.25% plummeted from nearly $64,000 in early November and now hovers below $40,000. In that same span, ethereum ETHUSD, +0.23% dropped from close to $5,000 to less than $3,000. “‘We’re worried that some of these newer individual investors might be receiving a tax bill that they aren’t prepared for.’”
That will happen once their brokerage platforms send along tax forms recording the person’s stock-market proceeds and losses, he noted. “That’s when I think they are going to be in for a surprise.” On the other hand, as companies like GameStop and AMC briefly reached the stratosphere, it was in no small part thanks to the buy-and-hold strategy from people on Reddit’s WallStreetBets. That “diamond hands” approach could be a saving grace, come tax time.
Metras said this rule increases tax bills every year — and he’s expecting the same this year. Many clients playing the market “don’t realize that they can’t deduct those loses and they have a ton of gains on paper. I see that every year, especially with platforms that make it super easy to trade a lot like Robinhood,” he said.
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