Many Robinhood Users Will Owe Higher Taxes Than Other Investors. Here's Why

As most people with even a passing interest in investing know by now, Robinhood is an online brokerage firm catering to young and novice investors. Its flashy app claims to make trading easier and more accessible, but it also allegedly incorporates behavioral nudges that push users to do more short-term trading.

Because of the app's incentives and its customers' general lack of experience, Robinhood users tend to be very active traders. In fact, the brokerage saw more daily average revenue trades in June than all major incumbent brokers, and more than the combined number of DARTs on E*Trade and Charles Schwab.

Unfortunately, such frequent trading has a number of downsides -- including the potential to be taxed at a higher rate than investors who don't trade as much.

Source Fool.com