• It is possible for you to establish independent wealth through share trading. Share trading, however, does introduce important tax ramifications that subtract from your bottom line. To invest strategically and pocket larger portions of your investment gains, you must first identify the best tax structures for share trading. Tax law benefits long-term investors, as evidenced by capital gains and dividend tax rates, alongside special retirement plans.
  
  

Long-Term Capital Gains

• You are generally responsible for paying taxes on realized capital gains on stock market investments. Capital gains are actually realized when you sell shares of stock at a profit. If your investments fail to perform, you may deduct $3,000 worth of realized capital losses from your taxable income.
  
  Capital gains are categorized into short-term and long-term capital gains for tax purposes. As of 2010, short-term capital gains are taxed at ordinary income rates of 10, 15, 25, 28, 33 and 35 percent. Long-term capital gains receive more favorable tax treatment and are either tax-free or taxed at maximum 15 percent rates. For long-term capital gains, you most own shares of stock for more than one year. As a single filer, your long-term capital gains will be tax free, if your taxable income is less than $34,000.
  
  

Qualified Dividends

• Dividend income features a similar tax structure to capital gains. Dividends are further classified into ordinary dividends and qualified dividends. Ordinary dividends are taxed at ordinary income rates of 10, 15, 25, 28, 33 and 35 percent. Alternatively, qualified dividends are either tax free or subject to 15 percent tax rates.
  
  For qualified dividends, you must hold shares of stock for at least 61 out of the 120 days surrounding their ex-dividend date. You are to buy and hold shares prior to, and through, the ex-dividend date to receive dividends on their payable date. A corporation informs shareholders of its dividend payment schedule through its investor relations department.
  
  

Retirement Plans

• The Internal Revenue Service (IRS) and financial services industry have worked together to create special retirement accounts that provide ideal tax structures for share trading. These retirement accounts include 401(k), Traditional IRA and Roth IRA plans. These plans all offer tax-deferred growth, where you are not taxed on capital gains and dividends as they occur within the account. In exchange for these tax benefits, you cannot make retirement plan withdrawals until after age 59 1/2--without a 10 percent tax penalty.
  
  You fund Traditional IRA and 401(k) plans with tax-deductible contributions. Upon withdrawal, Traditional IRA and 401(k) plans are taxed as ordinary income. Alternatively, Roth IRA contributions are made with after-tax money. Roth IRAs therefore provide for tax-free withdrawals at retirement. Because of their tax structure, Roth IRAs are more so suitable for young professionals, who expect to retire within a higher tax bracket.
  
  The IRS generally limits Traditional and Roth IRA contributions to $5,000, combined. Meanwhile, your 401(k) contributions may also be limited to $16,500.