Money Forum World

max78 · Joined: 08 Nov 2007 Posts: 2103

does earning made in the stock market get taxed the same as the earning I make at work? I know about the lasting capital gains stuff but what else.

Does it matter what tax bracket Im in as to how much it gets taxed? should I pay state tax, social security etc??

Say I Make 100 dollars in the stock market and I was in a 25% tax bracket and took out the hundred I made before a year what could I be left with?

Ivko · Joined: 08 Nov 2007 Posts: 2115

Interest earning on anything is taxed at your normal tax bracket, but you only have to pay federal and state tax, not social security or medicare tax.

Dividends are tax at your normal tax bracket, except for qualified dividends, which are taxed at maximum of 15% 5% for those in 10% or 15% bracket, and you must pay federal and state tax, but not social security or medicare tax.

Capital gains may be either short term security sold with owning it for less than one year, which is taxed at your regular tax bracket, and are only subject to federal and state tax, not social security or medicare tax. lasting capital gains security sold with owning it for one year or longer, except for hereditary securities which are treated as lasting regardless what the holding period are taxed at maximum of 15% 5% for those in 10% or 15% bracket, and are only subject to federal and state earning taxes, but not social security or medicare tax.

Earned earning is just what is subject to social security and medicare taxes, and is just wages, or self work earning through a Schedule C or F business.

Unearned earning interest, dividends, capital gains, social security, IRA, retirement, state tax refunds, etc aren't subject to social security or medicare taxes.

If you made $100 in the stock market and were in the 25% tax bracket, and sold the stock with owning it less than one year, it could be short term get, and could taxed at the 25% level, so you could end up with $75 after taxes.

Duane Justice · Joined: 08 Nov 2007 Posts: 2139

Short term gains in the stock market are taxed as common earning. You pay regular federal and state taxes on the get but not social security or medicare.

I am not sure what you mean by took out the. money. If you have a brokerage account and you put $1000 in and purchase a stock for $1000, then sell the stock some months afterward for $1200, the $200 is taxed if you leave it in the brokerage account or take in out.

KSampson · Joined: 08 Nov 2007 Posts: 2054

There are three tax situations with regards to market investments. common dividends are taxed as common earning at your marginal rate. Qualified difidends are taxed a lasting capital gains, typically at 15%. Captial gains the profit you hopefully. make when you sell stocks are taxed as common earning if the shares are held for one year or less or as lasting capital gains if held for over one year.

Rob Nixon · Joined: 08 Nov 2007 Posts: 2145

First of all, the worst that could occur is that your net get from investment in most stocks is taxed at your tax rate.

Long term capital gains: maximum 15%
Most stock dividends: maximum 15%
Short term capital gains: maximum your tax bracket

No social security or medicare tax is paid on investment earning.

You pay taxes only when your investments produce earning for you. that means your investments pay you interest or dividends, or you sell you invesments for more than you pay for them.

If your investments increase in value and you don't sell them, you don't pay tax on the increase in value.

If your state has earning tax, you'll also pay state earning tax on your investment earning. States differ as to how they tax investment earning.

Adrienne Atkins · Joined: 08 Nov 2007 Posts: 2162

While the money is growing in the market hopefully, it isn't going to be taxed to you. Youre only taxed on the dividends as you get them and when you take the money out of the investment.

For instance lets say you purchase five shares at $10 a share total investment is $50 . You leave it there for a while.

This summer, the company declared a $1 dividend per share. You get a check for $5 since you had five shares .

Then next month you sell two shares at $12. Your realized get is $4 two shares @ $2 per share .

At the end of the year, the stock is worth $16. Since you still have three shares after your sale, the get on that's $18.

Heres your tax situation:

Dividends: $5 taxable
Stock get realized : $4 taxable
Stock get unrealized : $18 not taxable still

As to what the real tax is on the $9, it'll rely on what the rest of your tax return seems how much other earning you have also as how long you have held on to the stock one year or more qualifies for lasting get and how long you have held on to the stock with respect to when the dividend has been declared.