Mutual Dividend Taxation

[huerta529]

In a Mutual Fund with a 144 turnover ratio what would i be tax.

Example

$10000 invested 

$1200 dividend for the year

How much would the $1200 be tax?

I know in stocks, but a bit confuse on Mutual Funds. This would be in a taxable account

[Anonymous]

for mutual funds it's almost  like you investing in separate stocks and possibly selling some of them.  some of its dividends can be qualified,  some can be  non-qualified,  some can be return of capital and some can be long-term capital gains. (there are no short-term gains. they are classified as non qualified dividends)

since we don't know your  other income or the breakdown of the dividend distributions, there is no way to say what taxes you'll pay.   

if you invested directly in a mutual fund, after year end it will send you a 1099 breaking down the dividends

if you invested through a broker, the mutual fund will send the info to the broker to be included on the brokers 1099

other than the oddity on short-term gains, the another unusual about mutual funds, is that if it has a net capital loss for the year, it can not be distributed.  in the future these losses will be used to offset capital gains the fund realizes.  another thing is that the fund may pay a dividend after year-end that is for the previous year and is taxable in the previous year 

[huerta529]

Thank you. In theory my much would i pay if it was all taxable would it depend on my tax bracket. I dont want to pay over 50% or up. I'll make 50,000 to 60,000 this year

[Anonymous_]

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@huerta529 wrote:

In theory my much would i pay if it was all taxable would it depend on my tax bracket. I dont want to pay over 50% or up. I'll make 50,000 to 60,000 this year

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There is no way you are going to pay over 50% in taxes on income of $50,000 - $60,000 plus $1,200 in dividend income (the tax brackets do not even reach that level).

Regardless, your tax liability will also depend upon your deductions (if you take the standard deduction, then it will depend upon your filing status).

You can use TaxCaster to get an idea of your tax liability with your earnings plus dividend income.

See https://turbotax.intuit.com/tax-tools/calculators/taxcaster/