does income made in the stock market get taxed the same as the income I make at work? I know about the long term capital gains stuff but what else.
Does it matter what tax bracket I'm in as to how much it gets taxed? Do I have to 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 would I be left with?
so wait if I buy 1000 dollars worth of stock and the price of the stock increases to give me 1200 dollars worth of stock at the end of the year they tax it even if my money's still invested in the stock? How do they differentiate this profit between a short term and long term gain then?
"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 have to pay federal and state tax, but not social security or medicare tax."
so if I made 100 dollars in the stock market in over a year I would get taxed 15% + federal tax of 25% + state tax? Is that right? that ends up being over 40% of the income going to taxes.
Interest income 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 have to pay federal and state tax, but not social security or medicare tax.
Capital gains can be either short term (security sold with owning it for less than 1 year), which is taxed at your regular tax bracket, and are only subject to federal and state tax, not social security or medicare tax. Long term capital gains (security sold with owning it for 1 year or longer, except for inherited securities which are treated as long-term no matter 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 income taxes, but not social security or medicare tax.
Earned income is basically what is subject to social security and medicare taxes, and is basically wages, or self employment income through a Schedule C or F business.
Unearned income (interest, dividends, capital gains, social security, IRA, pension, state tax refunds, etc) are not 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 1 year, it would be short term gain, and would taxed at the 25% level, so you would end up with $75 after taxes.