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    Investment Income

    I have a client with only investment income (dividends, interest, capital gain and stock sales). On his federal return, line 43, his table income is $25,172. Beyond this line, there is no further information to calculate a tax liability. On the Virginia State return, he is getting hit with a huge liability at $1616. Why is there a major difference between the two tax authorities? I did not feel comfortable releasing the tax return to the client until I get some guidance from my peers. Thanks for any assistance...help.

    #2
    Zero percent capital gains rate.

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      #3
      Virginia does not have a special tax rate for any type of income or filing status. Everybody pays the same rates. For taxable income up to $17,000 it is $720. Over that it is 5.75% of the excess, added to $720. www.tax.virginia.gov/income-tax-calculator.
      Last edited by Burke; 04-15-2017, 02:23 PM.

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        #4
        Originally posted by Thad View Post
        I have a client with only investment income (dividends, interest, capital gain and stock sales). On his federal return, line 43, his table income is $25,172. Beyond this line, there is no further information to calculate a tax liability. On the Virginia State return, he is getting hit with a huge liability at $1616. Why is there a major difference between the two tax authorities? I did not feel comfortable releasing the tax return to the client until I get some guidance from my peers. Thanks for any assistance...help.
        Your software likely produces a worksheet that details out the preferred tax treatment of items at LTCG rates. I suggest you print it out and study it so in the future you understand how it works, rather than just relying on software to "get it right".

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          #5
          A Hearty Thanks

          Thanks to all that gave me clear and understandable guidance regarding my inquiry. It was very helpful and enthusiastically accepted.

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            #6
            "client with only investment income"

            dividends:
            How much is qualified dividends

            interest:
            How much is muni interest which is not VA sourced?

            How much is LTCG from stock sales and/or distributions?

            Does VA apply ordinary income for QD & LTCG or is it the same as federal?

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              #7
              Originally posted by Y2KEA;187034?

              Does VA apply ordinary income for QD & LTCG or is it the same as federal?
              VA taxes all income, including these items, at regular rates. No special QD or LTCG treatment.

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