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.
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Zero percent capital gains rate. -
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.Comment
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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".Originally posted by Thad View PostComment
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A Hearty Thanks
Thanks to all that gave me clear and understandable guidance regarding my inquiry. It was very helpful and enthusiastically accepted.Comment
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"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?Comment
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VA taxes all income, including these items, at regular rates. No special QD or LTCG treatment.Originally posted by Y2KEA;187034?Comment
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