At what point does the tax get deducted from the profit I take?

The tax deduction doesn't automatically happen, but if you don't pay the estimated tax or shift up your tax deductions from other income sources, then you will be charged with penalties to pay to the IRS.

Generally, any profit you make on a sale of stocks is taxable at either 0%, or 15%, or 20% if you held shares for more than one year or at your ordinary tax rate if you held shares for less than a year.

Also, dividends you receive from stocks are taxable.

A tax deduction is not automatic, but if you don’t pay estimated tax, then you’ll be charged with penalties to pay to IRS.

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You have short-term capital gains tax rates and long-term capital gains tax rates that will vary on filing status and earnings. You only pay this tax once you execute the sale and the gains are realized.

Dividends, however, are taxable income, but there are two categories. The first is qualified dividends, which are taxed at 0%, 15%, or 20%. The second is non-qualified dividends, which are taxed as your regular income tax bracket.

Here are the tax rates for long-term capital gains as of 2020:

Single

• 0% Rate: Up to $40,000
• 15% Rate: $40,000 to $441,450
• 20% Rate: Over $441,450

Head of Household

• 0% Rate: Up to $53,600
• 15% Rate: $53,600 to $469,050
• 20% Rate: Over $469,050

Married Filing Jointly

• 0% Rate: Up to $80,000
• 15% Rate: $80,000 to $496,600
• 20%: Over $496,600

Married Filing Separately

• 0% Rate: Up to $40,000
• 15% Rate: $40,000 to $248,300
• 20% Rate: Over $248,300

Here are the tax rates for short-term capital gains as of 2020:

• 10%
• 12%
• 22%
• 24%
• 32%
• 35%
• 37%

Note: You can deduct your losses if they exceed your gains on your tax return. This is typically up to $3,000 per year for individuals.

The tax depends on the type of account you're working with. If the trade and withdrawals come from a non-retirement account, such as a Brokerage, the stock sale will be considered a taxable event, but there is no tax for withdrawing the funds.

Stock trades take two business days to settle before the proceeds are available to withdraw. If this is coming from a retirement account, such as an IRA, the stock sell will not be a taxable event, but any proceeds withdrawn from an IRA can be taxed as ordinary income, and there may be a 10% early withdrawal penalty if you're under the age of 59.

You can read more on Fidelity's website. The tax for retirement and nonretirement accounts will be included in your taxable income when you file for the tax year. With retirement accounts, you do have the option to withhold taxes on your withdrawal, or you can choose not to withhold and pay everything at tax time.

I hope this helps.